(Solved): 34. How is the real rate of interest calculated? a. Effective rate - nominal raterate of inflation ...

34. How is the real rate of interest calculated? a. Effective rate - nominal raterate of inflation b. Actual rate - return on investment c. Annual rate $x(1?$ rate of inflation) (d.) Annual rate - rate of inflation 35. Which of the following is an assumption of present value of money? a. There is risk involved in rating. b. Interest rates fluctuate with opportunities. c. The effects of inflation can be ignored. (d) Money has limited life. 36. Which of the following statements is true about interest? a. Most financial institutions lend on the nominal rate of interest. b. The nominal rate of interest is fixed among lenders. c. The effective rate of interest is traditionally less than its corresponding nominal rate of interest d. The effective rate of interest is traditionally more than its corresponding nominal rate of interest. 37. Which of the following rates is the annual percentage rate (APR) of interest equivalent to? 2. Effective (b.) Nominal c. Discounted d. Flat 38. Assume that a piece of equipment costs $\$13,000$ and will save the organization $\$3,000$ per year over the next five years. At the end of the five years, the equipment will be worth $\$4,000$. What is the payback period? a. 2.5 years b. 3 years c. 3.8 years (d) 4.33 years 39. What is the purpose of net present value (NPV)? a. To secure the best interest rate for a potential investment b. To secure the organization's best required rate of return (RRR) c. To compare an investment's annual percentage rate (APR) to the cost of an investment (d) To determine the difference between an investment opportunity's present value of cash infows and outflows