Indicate whether each of the following statements is true (T) or false (F).(all sections) a. Interest is

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Indicate whether each of the following statements is true (T) or false (F).(all sections)
a. Interest is money paid for the use of equity capital.
b. (A/F, i%, N) = (A/P, i%, N) + i.
c. Simple interest ignores the time value of money principle.
d. Cash-flow diagrams are analogous to free-body diagrams for mechanics problems.
e. $1,791 10 years from now is equivalent to $900 now if the interest rate equals 8% per year.
f. It is always true that i > r when M ≥ 2.
g. Suppose that a lump sum of $1,000 is invested at r = 10% for eight years. The future equivalent is greater for daily compounding than it is for continuous compounding.
h.
For a fixed amount, F dollars, that is received at EOYN, the “A equivalent” increases as the interest rate increases.
i. For a specified value of Fat EOYN, Pat time zero will be larger for r = 10% per year than it will be for r = 10% per year, compounded monthly.

Compounding
Compounding is the process in which an asset's earnings, from either capital gains or interest, are reinvested to generate additional earnings over time. This growth, calculated using exponential functions, occurs because the investment will...
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Engineering Economy

ISBN: 978-0133439274

16th edition

Authors: William G. Sullivan, Elin M. Wicks, C. Patrick Koelling

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