Question 1

What annual rate of return is earned on a $10,000 investment when it grows to $15,000 in 10 years?

Accepted Answer

A)  1.50 percent 
B)  3.97 percent 
C)  4.14 percent 
D)  5.00 percent 
A)  1.50 percent 
B)  3.97 percent 
C)  4.14 percent 
D)  5.00 percent

Question 2

You deposit $200 in an account that doubles in 10 years. How many years will it take the account to be reduced to its original value if it loses 25 percent per year?

Accepted Answer

A)  2.00 years 
B)  2.41 years 
C)  3.11 years 
D)  4.00 years 
A)  2.00 years 
B)  2.41 years 
C)  3.11 years 
D)  4.00 years

Question 3

Suppose a U.S. Treasury bond promises to pay $9,780.13 in three years. If bonds of this type are generating a 4 percent annual return, how much would you pay for this bond today?

Accepted Answer

A)  $8,429.71 
B)  $11,001.32 
C)  $8,694.50 
D)  $9,112.78 
A)  $8,429.71 
B)  $11,001.32 
C)  $8,694.50 
D)  $9,112.78

Question 4

Which of the following would you prefer?

Accepted Answer

A)  four hundred dollars to be received in nine years when rates are 8 percent 
B)  two hundred ten dollars today 
C)  five hundred dollars to be received in 12 years when rates are 8 percent 
D)  five hundred dollars to be received in 12 years when rates are 9 percent 
A)  four hundred dollars to be received in nine years when rates are 8 percent 
B)  two hundred ten dollars today 
C)  five hundred dollars to be received in 12 years when rates are 8 percent 
D)  five hundred dollars to be received in 12 years when rates are 9 percent

Question 5

Approximately how many years does it take to double a $500 investment when interest rates are 4 percent per year?

Accepted Answer

A)  0.06 year 
B)  6 years 
C)  6.94 years 
D)  18 years 
A)  0.06 year 
B)  6 years 
C)  6.94 years 
D)  18 years

Question 6

Approximately what interest rate is needed to double an investment over four years?

Accepted Answer

A)  4 percent 
B)  18 percent 
C)  25 percent 
D)  100 percent 
A)  4 percent 
B)  18 percent 
C)  25 percent 
D)  100 percent

Question 7

What is the present value of a $200 payment made in three years when the discount rate is 8 percent?

Accepted Answer

A)  $150.00 
B)  $158.77 
C)  $251.94 
D)  $515.42 
A)  $150.00 
B)  $158.77 
C)  $251.94 
D)  $515.42

Question 8

What would be more valuable, receiving $1,895 today or receiving $3,450 in six years if interest rates are 8 percent?

Accepted Answer

A)  receiving $1,895 today 
B)  receiving $3,450 in six years 
C)  They are worth the same amount 
D)  Need more information to make a determination. 
A)  receiving $1,895 today 
B)  receiving $3,450 in six years 
C)  They are worth the same amount 
D)  Need more information to make a determination.

Question 9

If an average home in your town currently costs $350,000, and house prices are expected to grow at an average rate of 3 percent per year, what will an average house cost in "5" years?

Accepted Answer

A)  $402,500.00 
B)  $405,168.75 
C)  $405,745.93 
D)  $507,500.00 
A)  $402,500.00 
B)  $405,168.75 
C)  $405,745.93 
D)  $507,500.00

Question 10

Approximately what interest rate is needed to double an investment over eight years?

Accepted Answer

A)  8 percent 
B)  9 percent 
C)  12 percent 
D)  100 percent 
A)  8 percent 
B)  9 percent 
C)  12 percent 
D)  100 percent

Question 11

What is the value in year 6 of a $900 cash flow made in year 4 when the interest rates are 8 percent?

Accepted Answer

A)  $1,044.00 
B)  $1,049.76 
C)  $1,332.00 
D)  $1,428.19 
A)  $1,044.00 
B)  $1,049.76 
C)  $1,332.00 
D)  $1,428.19

Question 12

How many years (and months) will it take $4 million to grow to $7 million with an annual interest rate of 12 percent?

Accepted Answer

A)  4 years and 1.92 months 
B)  4 years and 11.28 months 
C)  5 years and 6.54 months 
D)  5 years and 10.86 months 
A)  4 years and 1.92 months 
B)  4 years and 11.28 months 
C)  5 years and 6.54 months 
D)  5 years and 10.86 months

Question 13

How many years will it take $1 million to grow to $3 million with an annual interest rate of 7 percent?

Accepted Answer

A)  10.29 years 
B)  14.52 years 
C)  16.24 years 
D)  33.33 years 
A)  10.29 years 
B)  14.52 years 
C)  16.24 years 
D)  33.33 years

Question 14

Assume you borrow $100 from a payday lender. The terms are that you must pay a fee of $25 in advance (today) and one year from now you need to repay $112. What implied interest rate are you paying?

Accepted Answer

A)  12.00 percent 
B)  25.00 percent 
C)  49.33 percent 
D)  86.99 percent 
A)  12.00 percent 
B)  25.00 percent 
C)  49.33 percent 
D)  86.99 percent

Question 15

What is the value in year 20 of a $1,000 cash flow made in year 8 if interest rates are 15 percent in years "6 through 13" and increase to 18 percent in the remaining years?

Accepted Answer

A)  $5,779.57 
B)  $5,912.42 
C)  $6,005.71 
D)  $6,407.13 
A)  $5,779.57 
B)  $5,912.42 
C)  $6,005.71 
D)  $6,407.13

Question 16

Consider a $2,000 deposit earning 6 percent interest per year for five years. How much total interest is earned on the original deposit (excluding interest earned on interest)?

Accepted Answer

A)  $60.00 
B)  $76.45 
C)  $600.00 
D)  $676.45 
A)  $60.00 
B)  $76.45 
C)  $600.00 
D)  $676.45

Question 17

You invested $5,000 in the stock market one year ago. Today, the investment is valued at $5,500. What return did you earn? What return would you suffer next year for your investment to be valued at the original $5,000?

Accepted Answer

A)  10 percent, −9.09 percent, respectively 
B)  −10 percent, +9.09 percent, respectively 
C)  110 percent, −10 percent, respectively 
D)  110 percent, −9.09 percent, respectively 
A)  10 percent, −9.09 percent, respectively 
B)  −10 percent, +9.09 percent, respectively 
C)  110 percent, −10 percent, respectively 
D)  110 percent, −9.09 percent, respectively

Question 18

What annual rate of return is earned on a $13,000 investment made in year 2 when it grows to $17,000 by the end of year 7?

Accepted Answer

A)  10.64 percent 
B)  4.28 percent 
C)  8.04 percent 
D)  5.51 percent 
A)  10.64 percent 
B)  4.28 percent 
C)  8.04 percent 
D)  5.51 percent

Question 19

How much would be in your savings account in 12 years if you deposited $1,500 today? Assume the bank pays 5 percent per year.

Accepted Answer

A)  $2,387.12 
B)  $2,491.03 
C)  $2,693.78 
D)  $2,771.09 
A)  $2,387.12 
B)  $2,491.03 
C)  $2,693.78 
D)  $2,771.09

Question 20

Which of the following would you prefer?

Accepted Answer

A)  five hundred dollars to be received in 10 years when rates are 8 percent 
B)  three hundred dollars today 
C)  six hundred dollars to be received in 12 years when rates are 8 percent 
D)  seven hundred dollars to be received in 12 years when rates are 7 percent 
A)  five hundred dollars to be received in 10 years when rates are 8 percent 
B)  three hundred dollars today 
C)  six hundred dollars to be received in 12 years when rates are 8 percent 
D)  seven hundred dollars to be received in 12 years when rates are 7 percent

What annual rate of return is earned on a $10,000 investment when it grows to $15,000 in 10 years?

You deposit $200 in an account that doubles in 10 years. How many years will it take the account to be reduced to its original value if it loses 25 percent per year?

Suppose a U.S. Treasury bond promises to pay $9,780.13 in three years. If bonds of this type are generating a 4 percent annual return, how much would you pay for this bond today?

Which of the following would you prefer?

Approximately how many years does it take to double a $500 investment when interest rates are 4 percent per year?

Approximately what interest rate is needed to double an investment over four years?

What is the present value of a $200 payment made in three years when the discount rate is 8 percent?

What would be more valuable, receiving $1,895 today or receiving $3,450 in six years if interest rates are 8 percent?

If an average home in your town currently costs $350,000, and house prices are expected to grow at an average rate of 3 percent per year, what will an average house cost in "5" years?

Approximately what interest rate is needed to double an investment over eight years?

What is the value in year 6 of a $900 cash flow made in year 4 when the interest rates are 8 percent?

How many years (and months) will it take $4 million to grow to $7 million with an annual interest rate of 12 percent?

How many years will it take $1 million to grow to $3 million with an annual interest rate of 7 percent?

Assume you borrow $100 from a payday lender. The terms are that you must pay a fee of $25 in advance (today) and one year from now you need to repay $112. What implied interest rate are you paying?

What is the value in year 20 of a $1,000 cash flow made in year 8 if interest rates are 15 percent in years "6 through 13" and increase to 18 percent in the remaining years?

Consider a $2,000 deposit earning 6 percent interest per year for five years. How much total interest is earned on the original deposit (excluding interest earned on interest)?

You invested $5,000 in the stock market one year ago. Today, the investment is valued at $5,500. What return did you earn? What return would you suffer next year for your investment to be valued at the original $5,000?

What annual rate of return is earned on a $13,000 investment made in year 2 when it grows to $17,000 by the end of year 7?

How much would be in your savings account in 12 years if you deposited $1,500 today? Assume the bank pays 5 percent per year.

Which of the following would you prefer?

Introduction to Financial Management

Reviewing Financial Statements

Analyzing Financial Statements

Time Value of Money 2: Analyzing Annuity Cash Flows

Understanding Financial Markets and Institutions

Valuing Bonds

Valuing Stocks

Characterizing Risk and Return

Estimating Risk and Return

Calculating the Cost of Capital

Estimating Cash Flows on Capital Budgeting Projects

Weighing Net Present Value and Other Capital Budgeting Criteria

Working Capital Management and Policies

Financial Planning and Forecasting

Assessing Long-Term Debt, Equity, and Capital Structure

Sharing Firm Wealth: Dividends, Share Repurchases, and Other Payouts

Issuing Capital and the Investment Banking Process

International Corporate Finance

Mergers and Acquisitions and Financial Distress

Filters

Exam 4: Time Value of Money 1: Analyzing Single Cash Flows

What annual rate of return is earned on a $10,000 investment when it grows to $15,000 in 10 years?

You deposit $200 in an account that doubles in 10 years. How many years will it take the account to be reduced to its original value if it loses 25 percent per year?

Suppose a U.S. Treasury bond promises to pay $9,780.13 in three years. If bonds of this type are generating a 4 percent annual return, how much would you pay for this bond today?

Which of the following would you prefer?

Approximately how many years does it take to double a $500 investment when interest rates are 4 percent per year?

Approximately what interest rate is needed to double an investment over four years?

What is the present value of a $200 payment made in three years when the discount rate is 8 percent?

What would be more valuable, receiving $1,895 today or receiving $3,450 in six years if interest rates are 8 percent?

If an average home in your town currently costs $350,000, and house prices are expected to grow at an average rate of 3 percent per year, what will an average house cost in "5" years?

Approximately what interest rate is needed to double an investment over eight years?

What is the value in year 6 of a $900 cash flow made in year 4 when the interest rates are 8 percent?

How many years (and months) will it take $4 million to grow to $7 million with an annual interest rate of 12 percent?

How many years will it take $1 million to grow to $3 million with an annual interest rate of 7 percent?

Assume you borrow $100 from a payday lender. The terms are that you must pay a fee of $25 in advance (today) and one year from now you need to repay $112. What implied interest rate are you paying?

What is the value in year 20 of a $1,000 cash flow made in year 8 if interest rates are 15 percent in years "6 through 13" and increase to 18 percent in the remaining years?

Consider a $2,000 deposit earning 6 percent interest per year for five years. How much total interest is earned on the original deposit (excluding interest earned on interest)?

You invested $5,000 in the stock market one year ago. Today, the investment is valued at $5,500. What return did you earn? What return would you suffer next year for your investment to be valued at the original $5,000?

What annual rate of return is earned on a $13,000 investment made in year 2 when it grows to $17,000 by the end of year 7?

How much would be in your savings account in 12 years if you deposited $1,500 today? Assume the bank pays 5 percent per year.

Which of the following would you prefer?

Introduction to Financial Management

Reviewing Financial Statements

Analyzing Financial Statements

Time Value of Money 2: Analyzing Annuity Cash Flows

Understanding Financial Markets and Institutions

Valuing Bonds

Valuing Stocks

Characterizing Risk and Return

Estimating Risk and Return

Calculating the Cost of Capital

Estimating Cash Flows on Capital Budgeting Projects

Weighing Net Present Value and Other Capital Budgeting Criteria

Working Capital Management and Policies

Financial Planning and Forecasting

Assessing Long-Term Debt, Equity, and Capital Structure

Sharing Firm Wealth: Dividends, Share Repurchases, and Other Payouts

Issuing Capital and the Investment Banking Process

International Corporate Finance

Mergers and Acquisitions and Financial Distress

Filters