1. Which of the following is the proper value to use as the "first cost" of the defender in a replacement analysis?
A) The original cost.
B) The present book value.
C) The present market value.
D) The present trade-in value
2. The rate of return on an investment is the interest rate that is earned on the:
A) Money recovered from the investment.
B) The unrecovered balance of the investment.
C) Initial investment.
D) Income from the investment.
3. Given an annual interest rate of 10%, when continuous compounding is used rather than monthly compounding, which of the following is correct?
A) Effective interest rate remains the same, but nominal interest rate increases.
B) Effective interest rate remains the same, but nominal interest rate decreases.
C) Nominal interest rate remains the same, but effective interest rate increases.
D) Nominal interest rate remains the same, but effective interest rate decreases.