Question

1. True or​ False:  Annuities are unequal cash flows that go on for a finite period of time.
2. There are 3 formulas on our formula sheet that contain the variable​ “PM

3. True or​ False:  We can determine which​ “PMT” we’re being asked to solve for by noting what the problem provides in terms of r and n.

4. True or​ False: ​ "When given the annual withdrawals desired during the retirement​ period, the FVA tells us the amount we should have accumulated by the time we begin the retirement period.

5. True or​ False:  Given the amount needed at the beginning of the retirement​ period, the annual deposits needed during the working period can be found by solving for​ “PMT” in the FVA formula.

6. True or​ False: ​ “PMT" in the PVA formula tells us the periodic mortgage payments for a​ fixed-rate fully amortized loan.

7. True or​ False:  The principal part of a fixed mortgage loan payment can be found by multiplying the periodic interest rate by the ending balance for a given period.

8. True or​ False: For​ fixed-rate fully amortized mortgage​ loans, more of the fixed payment goes towards principal as we approach the end of the loan term.

9. True or​ False:  We can find the amount needed to pay off a​ fixed-rate fully amortized mortgage loan at any point in time by solving for the PV of the remaining payments.

Answer 1

The first statement is False. Annuities are equal cash flows that go for a finite time period

We can determine which​ “PMT” we’re being asked to solve for by noting what the problem provides in terms of r and n. False.

We also need either PVA or FVA to determine which PMT we need

"When given the annual withdrawals desired during the retirement​ period, the FVA tells us the amount we should have accumulated by the time we begin the retirement period.

This statement is true as then we shall use this future value to calculate the amount during retirement

Given the amount needed at the beginning of the retirement​ period, the annual deposits needed during the working period can be found by solving for​ “PMT” in the FVA formula.

This statement is also True

“PMT" in the PVA formula tells us the periodic mortgage payments for a​ fixed-rate fully amortized loan. True

The principal part of a fixed mortgage loan payment can be found by multiplying the periodic interest rate by the ending balance for a given period. False.

The interest rate can be found out so. Principal can be found out by deducting the interets from the payment

For​ fixed-rate fully amortized mortgage​ loans, more of the fixed payment goes towards principal as we approach the end of the loan term. True

We can find the amount needed to pay off a​ fixed-rate fully amortized mortgage loan at any point in time by solving for the PV of the remaining payments. True