Question 1

The value of a sum of money or an asset to be paid or received in the future is called the

Accepted Answer

A)  rated value. 
B)  present calculated value. 
C)  future present value. 
D)  present rated value. 
E)  present discounted value. 
A)  rated value. 
B)  present calculated value. 
C)  future present value. 
D)  present rated value. 
E)  present discounted value. E

Question 2

The proper equation to use in calculating the present discounted value of a sum F received in two years and again in four years is

Accepted Answer

A)    
B)    
C)    
D)    
A)    
B)    
C)    
D)    C

Question 3

Find an expression for the present discounted value of
(A)$500 to be paid at the end of five years.
(B)$100 to be paid at the end of two years and $100 to be paid at the end of three years.
(C)$8 to be paid at the end of one year, $8 to be paid at the end of two years, and $80 to be paid at the end of three years.

Accepted Answer

(A)   
(B)   
(C)

Question 4

Suppose a friend wants to borrow $500 and offers to pay you back over the next five years by paying $100 at the end of two years, $200 at the end of three years, $150 at the end of four years, and $125 at the end of five years. You want to at least break even over the five years, and you could earn 7 percent interest on the money if you kept it. Should you make the loan? (Hint: Calculate the present discounted value of the payments. Show your work.)

Accepted Answer

The answer of Suppose a friend wants to borrow $500...

Question 5

Discounting implies that a given amount of money is worth more today than in the future.

Accepted Answer

A) True 
 B)False

Question 6

The present discounted value of a $35 payment with an interest rate of 12 percent received every year for three years is

Accepted Answer

A)  $94.15. 
B)  $84.06. 
C)  $105.00. 
D)  $24.91. 
A)  $94.15. 
B)  $84.06. 
C)  $105.00. 
D)  $24.91.

Question 7

The process of determining how much a sum paid or received in the future is worth in the present is called

Accepted Answer

A)  appraisal. 
B)  valuing. 
C)  discounting. 
D)  dealing. 
E)  inflating. 
A)  appraisal. 
B)  valuing. 
C)  discounting. 
D)  dealing. 
E)  inflating.

Question 8

The present discounted value is today's value of future payments.

Accepted Answer

A) True 
 B)False

Question 9

Suppose you win a million dollars in the state lottery. What is the present discounted value of your winnings if you are scheduled to receive $200,000 at the end of each year for the next five years, and the rate of interest is 5 percent?

Accepted Answer

@#IMG-DLM& 
= $190,476.19 + $1

Question 10

The percentage rate used to calculate the value of a future sum is called the

Accepted Answer

A)  discount rate. 
B)  calculation rate. 
C)  interest rate. 
D)  future rate. 
E)  present rate. 
A)  discount rate. 
B)  calculation rate. 
C)  interest rate. 
D)  future rate. 
E)  present rate.

Question 11

With zero inflation, a dollar received today is worth ____ a dollar received one year from now.

Accepted Answer

A)  the same as 
B)  more than 
C)  less than 
D)  There is not enough information provided to answer this question. 
A)  the same as 
B)  more than 
C)  less than 
D)  There is not enough information provided to answer this question.

Question 12

You are considering two work contracts, each of which lasts for five years. The two contracts are summarized in the following table.   Assume that you will be paid at the end of each year. Contract 1 includes a signing bonus of $5,000 to be paid at the beginning of year 1, whereas contract 2 does not include a signing bonus. If the interest rate is 5 percent, which is the better offer?

Accepted Answer

The present discounted value o

Question 13

A dollar in the future is worth more than a dollar today.

Accepted Answer

A) True 
 B)False

Question 14

Discounting is the process of calculating how much future sums of money are worth today.

Accepted Answer

A) True 
 B)False

Question 15

The discount rate is commonly measured by the

Accepted Answer

A)  stock market returns. 
B)  rate of inflation. 
C)  interest rate. 
D)  unemployment rate. 
E)  rate of economic growth. 
A)  stock market returns. 
B)  rate of inflation. 
C)  interest rate. 
D)  unemployment rate. 
E)  rate of economic growth.

Question 16

The present discounted value of $75 to be received in two years with no interest is ____ when the interest rate is 8 percent.

Accepted Answer

A)  $64.30 
B)  $69.44 
C)  $87.48 
D)  $75 
E)  $81 
A)  $64.30 
B)  $69.44 
C)  $87.48 
D)  $75 
E)  $81

The value of a sum of money or an asset to be paid or received in the future is called the

The proper equation to use in calculating the present discounted value of a sum F received in two years and again in four years is

Discounting implies that a given amount of money is worth more today than in the future.

The present discounted value of a $35 payment with an interest rate of 12 percent received every year for three years is

The process of determining how much a sum paid or received in the future is worth in the present is called

The present discounted value is today's value of future payments.

Suppose you win a million dollars in the state lottery. What is the present discounted value of your winnings if you are scheduled to receive $200,000 at the end of each year for the next five years, and the rate of interest is 5 percent?

The percentage rate used to calculate the value of a future sum is called the

With zero inflation, a dollar received today is worth ____ a dollar received one year from now.

A dollar in the future is worth more than a dollar today.

Discounting is the process of calculating how much future sums of money are worth today.

The discount rate is commonly measured by the

The present discounted value of $75 to be received in two years with no interest is ____ when the interest rate is 8 percent.

The Central Idea

Observing and Explaining the Economy

The Supply and Demand Model

Subtleties of the Supply and Demand Model: Price Floors, Price Ceilings, and Elasticity

Macroeconomics: the Big Picture

Measuring the Production, Income, and Spending of Nations

The Spending Allocation Model

Unemployment and Employment

Productivity and Economic Growth

Money and Inflation

The Nature and Causes of Economic Fluctuations

Deriving the Formula for the Keynesian Multiplier and the Forward-Looking Consumption Model

The Economic Fluctuations Model

Using the Economic Fluctuations Model

Fiscal Policy

Monetary Policy

Capital and Financial Markets

Economic Growth and Globalization

International Trade

International Finance

Reading, Understanding, and Creating Graphs

the Miracle of Compound Growth

Deriving the Growth Accounting Formula

Filters

Exam 23: Present Discounted Value

The value of a sum of money or an asset to be paid or received in the future is called the

The proper equation to use in calculating the present discounted value of a sum F received in two years and again in four years is

Discounting implies that a given amount of money is worth more today than in the future.

The present discounted value of a $35 payment with an interest rate of 12 percent received every year for three years is

The process of determining how much a sum paid or received in the future is worth in the present is called

The present discounted value is today's value of future payments.

Suppose you win a million dollars in the state lottery. What is the present discounted value of your winnings if you are scheduled to receive $200,000 at the end of each year for the next five years, and the rate of interest is 5 percent?

The percentage rate used to calculate the value of a future sum is called the

With zero inflation, a dollar received today is worth ____ a dollar received one year from now.

A dollar in the future is worth more than a dollar today.

Discounting is the process of calculating how much future sums of money are worth today.

The discount rate is commonly measured by the

The present discounted value of $75 to be received in two years with no interest is ____ when the interest rate is 8 percent.

The Central Idea

Observing and Explaining the Economy

The Supply and Demand Model

Subtleties of the Supply and Demand Model: Price Floors, Price Ceilings, and Elasticity

Macroeconomics: the Big Picture

Measuring the Production, Income, and Spending of Nations

The Spending Allocation Model

Unemployment and Employment

Productivity and Economic Growth

Money and Inflation

The Nature and Causes of Economic Fluctuations

Deriving the Formula for the Keynesian Multiplier and the Forward-Looking Consumption Model

The Economic Fluctuations Model

Using the Economic Fluctuations Model

Fiscal Policy

Monetary Policy

Capital and Financial Markets

Economic Growth and Globalization

International Trade

International Finance

Reading, Understanding, and Creating Graphs

the Miracle of Compound Growth

Deriving the Growth Accounting Formula

Filters