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Let's go through the questions you provided in the image one by one and discuss their correctness:

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**28. If the interest rate is Zero, the present value of a future sum of money is equal to its future value.**

- **Answer given: False**
- **Correct answer: True**
  - **Explanation:** If the interest rate is zero, there is no time value of money. This means that the present value will equal the future value because the money doesn't grow or shrink over time.

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**29. An annuity due has a higher present value than an ordinary annuity, assuming the same cash flows and discount rate.**

- **Answer given: True**
- **Correct answer: True**
  - **Explanation:** In an annuity due, payments are made at the beginning of each period, meaning each payment is discounted for one less period compared to an ordinary annuity, resulting in a higher present value.

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**30. The effective annual rate (EAR) is always lower than the nominal interest rate when interest is compounded more than once a year.**

- **Answer given: False**
- **Correct answer: False**
  - **Explanation:** The effective annual rate (EAR) is actually higher than the nominal interest rate when compounding occurs more than once a year, due to the effect of compounding.

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**31. When calculating the future value of a sum of money, it is unnecessary to account for the frequency of compounding if interest is compounded annually.**

- **Answer given: True**
- **Correct answer: True**
  - **Explanation:** If interest is compounded annually, there’s no need to adjust the calculation for different compounding frequencies because there is only one compounding period per year.

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**32. The time value of money concept is based on the principle that money today is worth more than the same amount in the future due to its earning potential.**

- **Answer given: True**
- **Correct answer: True**
  - **Explanation:** This is a basic principle of finance. A dollar today can be invested to earn interest, making it worth more than a dollar received in the future.

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**33. Regular Payments if made at the end of each period such as the beginning of every year are classified as:**
- **Answer given: Both (a) and (c)**
- **Correct answer: a) Ordinary annuity**
  - **Explanation:** Payments made at the end of each period classify as an **ordinary annuity**. A deferred annuity involves delaying payments for a period, not regular payments at the end of each period.

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**34. The following information pertains to 4 commercial banks in South Africa. Which bank should you invest in?**

- Capitec: 15% p.a., compounded annually
- FNB: 14.25% p.a., compounded quarterly
- Absa: 14.12% p.a., compounded monthly
- Standard: 14% p.a., compounded daily

- **Answer given: Not circled yet**

- **Correct answer:** FNB (14.25% compounded quarterly)
  - **Explanation:** We need to calculate the **Effective Annual Rate (EAR)** for each bank and choose the one with the highest return. FNB offers the highest EAR due to quarterly compounding.

The following multiple-choice questions cover topics related to interest rates, annuities, and the time value of money. The user answered questions on concepts such as present value, effective annual rate, and payment classification.

Explore multiple-choice questions on present value, annuities, and interest rates. Learn about the formulas for calculating present value and future value, the differences between ordinary and annuity due, and how compounding affects the effective annual rate (EAR).

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