Question 1

When calculating the number of years needed to grow an investment to a specific amount of money

Accepted Answer

A)  the lower the interest rate, the shorter the time period needed to achieve the growth. 
B)  the higher the interest rate, the shorter the time period needed to achieve the growth. 
C)  the interest rate has nothing to do with the length of the time period needed to achieve the growth. 
D)  the Rule of 72 is the only way to calculate the time period needed to achieve the growth. 
A)  the lower the interest rate, the shorter the time period needed to achieve the growth. 
B)  the higher the interest rate, the shorter the time period needed to achieve the growth. 
C)  the interest rate has nothing to do with the length of the time period needed to achieve the growth. 
D)  the Rule of 72 is the only way to calculate the time period needed to achieve the growth.

Question 2

What is the future value of $1,000 deposited for one year earning 5 percent interest rate annually?

Accepted Answer

A)  $1,000 
B)  $1,005 
C)  $1,050 
D)  $2,050 
A)  $1,000 
B)  $1,005 
C)  $1,050 
D)  $2,050

Question 3

What annual rate of return is earned on an $895 investment that grows to $1,976 in eight years?

Accepted Answer

A)  9.14 percent 
B)  9.97 percent 
C)  10.41 percent 
D)  11.73 percent 
A)  9.14 percent 
B)  9.97 percent 
C)  10.41 percent 
D)  11.73 percent

Question 4

A deposit of $300 earns interest rates of 7 percent in the first year and 10 percent in the second year. What would be the second year future value?

Accepted Answer

A)  $351.00 
B)  $353.10 
C)  $602.17 
D)  $651.00 
A)  $351.00 
B)  $353.10 
C)  $602.17 
D)  $651.00

Question 5

A stock investor deposited $3,450 six years ago. Today the account is valued at $2,180. What annual rate of return has this investor earned?

Accepted Answer

A)  −7.95 percent 
B)  −7.37 percent 
C)  −10.26 percent 
D)  −9.74 percent 
A)  −7.95 percent 
B)  −7.37 percent 
C)  −10.26 percent 
D)  −9.74 percent

Question 6

What annual rate of return is earned on a $900 investment when it grows to $2,500 in 15 years?

Accepted Answer

A)  1.78 percent 
B)  2.78 percent 
C)  6.58 percent 
D)  7.05 percent 
A)  1.78 percent 
B)  2.78 percent 
C)  6.58 percent 
D)  7.05 percent

Question 7

How many years will it take $200 to grow to $250 with an annual interest rate of 4 percent?

Accepted Answer

A)  1.24 years 
B)  5.69 years 
C)  6.25 years 
D)  18.00 years 
A)  1.24 years 
B)  5.69 years 
C)  6.25 years 
D)  18.00 years

Question 8

Which of the following is the equivalent of $300 received today?

Accepted Answer

A)  Seven hundred ninety-five dollars ninety-nine cents to be received 20 years in the future assuming a 5 percent annual interest rate. 
B)  Hundred dollars to be received two years from now and $200 three years from now. 
C)  Three hundred dollars compounded at 10 percent for one year. 
D)  All of these choices are correct. 
A)  Seven hundred ninety-five dollars ninety-nine cents to be received 20 years in the future assuming a 5 percent annual interest rate. 
B)  Hundred dollars to be received two years from now and $200 three years from now. 
C)  Three hundred dollars compounded at 10 percent for one year. 
D)  All of these choices are correct.

Question 9

Which is more valuable, receiving $775 today or receiving $885 in 2.5 years if interest rates are 7.25 percent?

Accepted Answer

A)  receiving $775 today 
B)  receiving $885 in 2.5 years 
C)  They are worth the same amount 
D)  Need more information to make a determination. 
A)  receiving $775 today 
B)  receiving $885 in 2.5 years 
C)  They are worth the same amount 
D)  Need more information to make a determination.

Question 10

What is the value in year 5 of a $600 cash flow made in year 10 when interest rates are 5 percent?

Accepted Answer

A)  $368.35 
B)  $450.00 
C)  $470.12 
D)  $570.00 
A)  $368.35 
B)  $450.00 
C)  $470.12 
D)  $570.00

Question 11

What annual rate of return is earned on a $2,000 investment made in year 3 when it grows to $3,000 by the end of year 6?

Accepted Answer

A)  6.99 percent 
B)  14.47 percent 
C)  24.00 percent 
D)  50.00 percent 
A)  6.99 percent 
B)  14.47 percent 
C)  24.00 percent 
D)  50.00 percent

Question 12

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

Accepted Answer

A)  6 percent 
B)  12 percent 
C)  17 percent 
D)  100 percent 
A)  6 percent 
B)  12 percent 
C)  17 percent 
D)  100 percent

Question 13

A deposit of $500 earns 5 percent the first year, 6 percent the second year, and 7 percent the third year. What would be the third year future value?

Accepted Answer

A)  $595.46 
B)  $615.62 
C)  $634.91 
D)  $671.02 
A)  $595.46 
B)  $615.62 
C)  $634.91 
D)  $671.02

Question 14

We call the process of earning interest on both the original deposit and on the earlier interest payments

Accepted Answer

A)  discounting. 
B)  multiplying. 
C)  compounding. 
D)  computing. 
A)  discounting. 
B)  multiplying. 
C)  compounding. 
D)  computing.

Question 15

To solve for time-value equations, you need to know:

Accepted Answer

A)  the starting cash flow. 
B)  the interest rate. 
C)  the future cash flow. 
D)  all of the above. 
A)  the starting cash flow. 
B)  the interest rate. 
C)  the future cash flow. 
D)  all of the above.

Question 16

Determine the interest rate earned on an $800 deposit when $808 is paid back in one year.

Accepted Answer

A)  100 percent 
B)  10 percent 
C)  1 percent 
D)  15 percent 
A)  100 percent 
B)  10 percent 
C)  1 percent 
D)  15 percent

Question 17

With regard to money deposited in a bank, future values are

Accepted Answer

A)  smaller than present values. 
B)  larger than present values. 
C)  equal to present values. 
D)  are completely independent of present values. 
A)  smaller than present values. 
B)  larger than present values. 
C)  equal to present values. 
D)  are completely independent of present values.

Question 18

When computing the rate of return from selling an investment, the number of years between the present and future cash flows is an important factor in determining

Accepted Answer

A)  the annual rate earned. 
B)  the annual payments required. 
C)  whether the present value or the future value is a cash inflow. 
D)  whether the present value or the future value is a cash outflow. 
A)  the annual rate earned. 
B)  the annual payments required. 
C)  whether the present value or the future value is a cash inflow. 
D)  whether the present value or the future value is a cash outflow.

Question 19

What is the present value of a $500 payment made in four years when the discount rate is 8 percent?

Accepted Answer

A)  $365.35 
B)  $367.51 
C)  $460.00 
D)  $680.24 
A)  $365.35 
B)  $367.51 
C)  $460.00 
D)  $680.24

Question 20

When your investment compounds, your money will grow in a(n) ________ fashion.

Accepted Answer

A)  linear 
B)  exponential 
C)  static 
D)  implied 
A)  linear 
B)  exponential 
C)  static 
D)  implied

When calculating the number of years needed to grow an investment to a specific amount of money

What is the future value of $1,000 deposited for one year earning 5 percent interest rate annually?

What annual rate of return is earned on an $895 investment that grows to $1,976 in eight years?

A deposit of $300 earns interest rates of 7 percent in the first year and 10 percent in the second year. What would be the second year future value?

A stock investor deposited $3,450 six years ago. Today the account is valued at $2,180. What annual rate of return has this investor earned?

What annual rate of return is earned on a $900 investment when it grows to $2,500 in 15 years?

How many years will it take $200 to grow to $250 with an annual interest rate of 4 percent?

Which of the following is the equivalent of $300 received today?

Which is more valuable, receiving $775 today or receiving $885 in 2.5 years if interest rates are 7.25 percent?

What is the value in year 5 of a $600 cash flow made in year 10 when interest rates are 5 percent?

What annual rate of return is earned on a $2,000 investment made in year 3 when it grows to $3,000 by the end of year 6?

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

A deposit of $500 earns 5 percent the first year, 6 percent the second year, and 7 percent the third year. What would be the third year future value?

We call the process of earning interest on both the original deposit and on the earlier interest payments

To solve for time-value equations, you need to know:

Determine the interest rate earned on an $800 deposit when $808 is paid back in one year.

With regard to money deposited in a bank, future values are

When computing the rate of return from selling an investment, the number of years between the present and future cash flows is an important factor in determining

What is the present value of a $500 payment made in four years when the discount rate is 8 percent?

When your investment compounds, your money will grow in a(n) ________ fashion.

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

When calculating the number of years needed to grow an investment to a specific amount of money

What is the future value of $1,000 deposited for one year earning 5 percent interest rate annually?

What annual rate of return is earned on an $895 investment that grows to $1,976 in eight years?

A deposit of $300 earns interest rates of 7 percent in the first year and 10 percent in the second year. What would be the second year future value?

A stock investor deposited $3,450 six years ago. Today the account is valued at $2,180. What annual rate of return has this investor earned?

What annual rate of return is earned on a $900 investment when it grows to $2,500 in 15 years?

How many years will it take $200 to grow to $250 with an annual interest rate of 4 percent?

Which of the following is the equivalent of $300 received today?

Which is more valuable, receiving $775 today or receiving $885 in 2.5 years if interest rates are 7.25 percent?

What is the value in year 5 of a $600 cash flow made in year 10 when interest rates are 5 percent?

What annual rate of return is earned on a $2,000 investment made in year 3 when it grows to $3,000 by the end of year 6?

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

A deposit of $500 earns 5 percent the first year, 6 percent the second year, and 7 percent the third year. What would be the third year future value?

We call the process of earning interest on both the original deposit and on the earlier interest payments

To solve for time-value equations, you need to know:

Determine the interest rate earned on an $800 deposit when $808 is paid back in one year.

With regard to money deposited in a bank, future values are

When computing the rate of return from selling an investment, the number of years between the present and future cash flows is an important factor in determining

What is the present value of a $500 payment made in four years when the discount rate is 8 percent?

When your investment compounds, your money will grow in a(n) ________ fashion.

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