Exam 9: The Time Value of Money

The FV_IFA for the future value of an annuity is 4.641 at 10% for 4 years. If we wish to accumulate $8,000 by the end of 4 years, how much should the annual payments be?

(Multiple Choice)

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Question 41

Dr. J. wants to buy an IBM personal computer which will cost $2,788 four years from today. He would like to set aside an equal amount at the end of each year in order to accumulate the amount needed. He can earn a 7% annual return. How much should he set aside?

(Multiple Choice)

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Question 42

Mr. Darden is selling his house for $165,000. He bought it for $55,000 nine years ago. What is the annual return on his investment?

(Multiple Choice)

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Question 43

The present value of a positive future value may become negative as discount rates become higher and higher.

(True/False)

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Question 44

An annuity is a series of consecutive payments of equal amount.

(True/False)

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Question 45

You are to receive $12,000 at the end of 5 years. The available yield on investments is 6%. Which table would you use to determine the value of that sum today?

(Multiple Choice)

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Question 46

In determining the compound sum of a single amount, one measures:

(Multiple Choice)

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Question 47

After 10 years, 1,000 shares of stock originally purchased for $10/share was sold for $50/share. What was the annual yield on the investment? Choose the closest answer assuming annual compounding.

(Multiple Choice)

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Question 48

Babe Ruth Jr. has agreed to play for the Toronto Blue Jays for $9 million per year for the next 10 years. What table would you use to calculate the value of this contract in today's dollars?

(Multiple Choice)

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Question 49

The annualized return on an investment can be determined by reference to a table for the present value of $1.

(True/False)

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Question 50

As the discount rate becomes higher and higher, the present value of inflows approaches:

(Multiple Choice)

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Question 51

Joe Nautilus has $120,000 and wants to retire. What return must his money earn so he may receive annual benefits of $20,000 for the next 14 years?

(Multiple Choice)

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Question 52

Marcia Stubern is planning for her golden years. She will retire in 20 years, at which time she plans to begin withdrawing $60,000 annually. She is expected to live for 20 years following her retirement. Her financial advisor thinks she can earn 9% annually. How much does she need to invest each year to prepare for her financial needs after her retirement?

(Essay)

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Question 53

An annuity may be defined as:

(Multiple Choice)

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Question 54

An amount of money to be received in the future is worth less today than the stated amount.

(True/False)

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Question 55

The future value of an annuity assumes that the payments are received at the end of the year and that the last payment does not compound.

(True/False)

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Question 56

The farther into the future any given amount is received, the larger its present value.

(True/False)

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Question 57

Pedro Gonzalez will invest $5,000 at the beginning of each year for the next 9 years. The current yield is 8%. What is the future value?

(Multiple Choice)

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Question 58

Mr. Nailor invests $5,000 in a certificate of deposit at his local bank. He receives annual interest of 8% for 7 years. How much interest will his investment earn during this time period?

(Multiple Choice)

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Question 59

To find the yield on investments that require the payment of a single amount initially, and which then return a single amount sometime in the future, the correct table to use is:

(Multiple Choice)

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Question 60

Showing 41 - 60 of 100

The FV_IFA for the future value of an annuity is 4.641 at 10% for 4 years. If we wish to accumulate $8,000 by the end of 4 years, how much should the annual payments be?

Dr. J. wants to buy an IBM personal computer which will cost $2,788 four years from today. He would like to set aside an equal amount at the end of each year in order to accumulate the amount needed. He can earn a 7% annual return. How much should he set aside?

Mr. Darden is selling his house for $165,000. He bought it for $55,000 nine years ago. What is the annual return on his investment?

The present value of a positive future value may become negative as discount rates become higher and higher.

An annuity is a series of consecutive payments of equal amount.

You are to receive $12,000 at the end of 5 years. The available yield on investments is 6%. Which table would you use to determine the value of that sum today?

In determining the compound sum of a single amount, one measures:

After 10 years, 1,000 shares of stock originally purchased for $10/share was sold for $50/share. What was the annual yield on the investment? Choose the closest answer assuming annual compounding.

Babe Ruth Jr. has agreed to play for the Toronto Blue Jays for $9 million per year for the next 10 years. What table would you use to calculate the value of this contract in today's dollars?

The annualized return on an investment can be determined by reference to a table for the present value of $1.

As the discount rate becomes higher and higher, the present value of inflows approaches:

Joe Nautilus has $120,000 and wants to retire. What return must his money earn so he may receive annual benefits of $20,000 for the next 14 years?

An annuity may be defined as:

An amount of money to be received in the future is worth less today than the stated amount.

The future value of an annuity assumes that the payments are received at the end of the year and that the last payment does not compound.

The farther into the future any given amount is received, the larger its present value.

Pedro Gonzalez will invest $5,000 at the beginning of each year for the next 9 years. The current yield is 8%. What is the future value?

Mr. Nailor invests $5,000 in a certificate of deposit at his local bank. He receives annual interest of 8% for 7 years. How much interest will his investment earn during this time period?

To find the yield on investments that require the payment of a single amount initially, and which then return a single amount sometime in the future, the correct table to use is:

The Goals and Functions of Financial Management

Review of Accounting

Financial Analysis

Financial Forecasting

Operating and Financial Leverage

Working Capital and the Financing Decision

Current Asset Management

Sources of Short-Term Financing

Valuation and Rates of Return

Cost of Capital

The Capital Budgeting Decision

Risk and Capital Budgeting

Capital Markets

Investment Underwriting

Long-Term Debt and Lease Financing

Common and Preferred Stock Financing

Dividend Policy and Retained Earnings

Derivative Securities

External Growth Through Mergers

International Financial Management

Filters

Exam 9: The Time Value of Money

The FVIFA for the future value of an annuity is 4.641 at 10% for 4 years. If we wish to accumulate $8,000 by the end of 4 years, how much should the annual payments be?

Dr. J. wants to buy an IBM personal computer which will cost $2,788 four years from today. He would like to set aside an equal amount at the end of each year in order to accumulate the amount needed. He can earn a 7% annual return. How much should he set aside?

Mr. Darden is selling his house for $165,000. He bought it for $55,000 nine years ago. What is the annual return on his investment?

The present value of a positive future value may become negative as discount rates become higher and higher.

An annuity is a series of consecutive payments of equal amount.

You are to receive $12,000 at the end of 5 years. The available yield on investments is 6%. Which table would you use to determine the value of that sum today?

In determining the compound sum of a single amount, one measures:

After 10 years, 1,000 shares of stock originally purchased for $10/share was sold for $50/share. What was the annual yield on the investment? Choose the closest answer assuming annual compounding.

Babe Ruth Jr. has agreed to play for the Toronto Blue Jays for $9 million per year for the next 10 years. What table would you use to calculate the value of this contract in today's dollars?

The annualized return on an investment can be determined by reference to a table for the present value of $1.

As the discount rate becomes higher and higher, the present value of inflows approaches:

Joe Nautilus has $120,000 and wants to retire. What return must his money earn so he may receive annual benefits of $20,000 for the next 14 years?

An annuity may be defined as:

An amount of money to be received in the future is worth less today than the stated amount.

The future value of an annuity assumes that the payments are received at the end of the year and that the last payment does not compound.

The farther into the future any given amount is received, the larger its present value.

Pedro Gonzalez will invest $5,000 at the beginning of each year for the next 9 years. The current yield is 8%. What is the future value?

Mr. Nailor invests $5,000 in a certificate of deposit at his local bank. He receives annual interest of 8% for 7 years. How much interest will his investment earn during this time period?

To find the yield on investments that require the payment of a single amount initially, and which then return a single amount sometime in the future, the correct table to use is:

The Goals and Functions of Financial Management

Review of Accounting

Financial Analysis

Financial Forecasting

Operating and Financial Leverage

Working Capital and the Financing Decision

Current Asset Management

Sources of Short-Term Financing

Valuation and Rates of Return

Cost of Capital

The Capital Budgeting Decision

Risk and Capital Budgeting

Capital Markets

Investment Underwriting

Long-Term Debt and Lease Financing

Common and Preferred Stock Financing

Dividend Policy and Retained Earnings

Derivative Securities

External Growth Through Mergers

International Financial Management

Filters

The FV_IFA for the future value of an annuity is 4.641 at 10% for 4 years. If we wish to accumulate $8,000 by the end of 4 years, how much should the annual payments be?