Question: 1. On what three things is equivalence based? 2. What are the characteristics of a uniform series of cash flows? 3. How do you find

1. On what three things is equivalence based? 2. What are the characteristics of a uniform series of cash flows? 3. How do you find the interest rate at which two or more cash flows are equivalent? 4. What does it mean that equivalence is independent of the time period chosen to evaluate equivalence? 5. How does inflation affect interest rates? 6. How do taxes on interest affect the growth of money?

10-How do closing costs affect the effective interest rate? 11. What does it mean when a bank discounts interest? 12. What is a compensating balance and how does it affect the interest rate on a line of credit? 13. What is a commitment fee and how does it affect the interest rate on a line of credit? 14. Why would a lender require that a line of credit be paid off for one or two months of the year? 15. What is trade financing?

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