problem1:  The future value of an annuity is:

   [A] less than each annuity payment

   [B] equal to each annuity payment

   [C] more than each annuity payment

   [D] none of the above 

problem2: The basic "rent" that you are charged when you borrow money is called:

   [A] inflation premium

   [B] risk premium

   [C] real rate of return

   [D] none of the above 

problem3:  A high price earnings ratio usually indicates that a firm is a:

   [A] value stock

   [B] growth stock

   [C] convertible security

   [D] constant security 

problem4:  Which of the following capital budgeting methods states the return of a project as a percentage?

   [A] payback period

   [B] net present value

   [C] internal rate of return

   [D] none of the above 

problem5:  According to the reinvestment rate assumption, which method of capital budgeting assumes cash flows are reinvested at the project's rate of return?

   [A] internal rate of return

   [B] none of the above

   [C] payback period

   [D] net present value