indicate whether each of the following is true t or false f in the space provided 618867

1.

Present value is based on three variables: (1) the dollar amount to be received (future amount), (2) the probability of receiving that amount in the future, and (3) the interest rate (the discount rate).

2.

The process of determining the present value is referred to as discounting the future amount.

3.

In computing the present value of an annuity, it is necessary to know the (1) discount rate, (2) the number of discount periods, and (3) the present value.

4.

Discounting may also be done over shorter periods of time such as monthly, quarterly, or semiannually.

5.

The present value (or market price) of a bond is a function of three variables: (1) the payment amounts, (2) the length of time until the amounts are paid, and (3) the discount rate.