Question 1

At an annual interest rate of 8% compounded annually, $5,300 will accumulate to a total of $7,210.65 in five years.

Accepted Answer

A) True 
 B)False  False

Question 2

Madera Iron Sculpting is planning to save the money needed to replace one of its robotic welders in five years by making a one-time deposit of $20,000 today and four yearly contributions of $5,000 beginning at the end of year 1. The deposits will earn 10% interest. How much money will Sierra have accumulated at the end of five years to replace the welder?

Accepted Answer

The answer of Madera Iron Sculpting is planning to save...

Question 3

A company has $50,000 today to invest in a fund that will earn 7%. How much will the fund contain at the end of eight years?

Accepted Answer

$50,000 x 1.7182 = $85,910

Question 4

A company is considering investing in a project that is expected to return $350,000 four years from now. How much is the company willing to pay for this investment if the company requires a 12% return?

Accepted Answer

A)  $ 55,606 
B)  $137,681 
C)  $222,425 
D)  $265,764 
E)  $350,000 
A)  $ 55,606 
B)  $137,681 
C)  $222,425 
D)  $265,764 
E)  $350,000

Question 5

A company is creating a fund by depositing $65,763 today. The fund will grow to $90,000 after eight years. What annual interest rate is the company earning on the fund?

Accepted Answer

$65,763/$90,000 = 0.7307
This

Question 6

What interest rate is required to accumulate $6,802.50 in four years from an investment of $5,000?

Accepted Answer

A)  5% 
B)  8% 
C)  10% 
D)  12% 
E)  15% 
A)  5% 
B)  8% 
C)  10% 
D)  12% 
E)  15%

Question 7

The future value of an ordinary annuity is the accumulated value of each annuity payment with interest one period after the date of the final payment.

Accepted Answer

A) True 
 B)False

Question 8

Explain the concept of the future value of an annuity.

Accepted Answer

The future value of an annuity

Question 9

Explain the concept of the present value of a single amount.

Accepted Answer

The present value of a single

Question 10

A company needs to have $200,000 in four years, and will create a fund to ensure that the $200,000 will be available. If they can earn a 7% return, how much must the company invest in the fund today to equal the $200,000 at the end of four years?

Accepted Answer

$200,000 x

Question 11

A company is setting up a sinking fund to pay off $8,654,000 in bonds that are due in seven years. The fund will earn 7% interest, and the company intends to put away a series of equal year-end amounts for seven years. What amount must the company deposit annually?

Accepted Answer

$8,654,000

Question 12

The interest rate is also called the __________________ rate.

Accepted Answer

The answer of The interest rate is also called the...

Question 13

When you reach retirement age, you will have one fund of $100,000 from which you are going to make annual withdrawals of $14,702. The fund will earn 6% per year. For how many years will you be able to draw an even amount of $14,702?

Accepted Answer

The answer of When you reach retirement age, you will...

Question 14

The future value of $100 compounded semiannually for three years at 12% equals $140.49.

Accepted Answer

A) True 
 B)False

Question 15

The present value of $5,000 per year for three years at 12% compounded annually is $12,009.

Accepted Answer

A) True 
 B)False

Question 16

The number of periods in a future value calculation can only be expressed in years.

Accepted Answer

A) True 
 B)False

Question 17

Troy has $105,000 now. He has a loan of $175,000 that he must pay at the end of five years. He can invest his $105,000 at 10% interest compounded semiannually. Will Troy have enough to pay his loan at the end of the five years?

Accepted Answer

$105,000 x 1.6289 =

Question 18

The number of periods in a present value calculation can only be expressed in years.

Accepted Answer

A) True 
 B)False

Question 19

The present value of 1 formula is often useful when a borrowed asset must be repaid in full at a later date and the borrower wants to know its worth at the future date.

Accepted Answer

A) True 
 B)False

Question 20

An annuity is a series of equal payments occurring at equal intervals.

Accepted Answer

A) True 
 B)False

At an annual interest rate of 8% compounded annually, $5,300 will accumulate to a total of $7,210.65 in five years.

A company has $50,000 today to invest in a fund that will earn 7%. How much will the fund contain at the end of eight years?

A company is considering investing in a project that is expected to return $350,000 four years from now. How much is the company willing to pay for this investment if the company requires a 12% return?

A company is creating a fund by depositing $65,763 today. The fund will grow to $90,000 after eight years. What annual interest rate is the company earning on the fund?

What interest rate is required to accumulate $6,802.50 in four years from an investment of $5,000?

The future value of an ordinary annuity is the accumulated value of each annuity payment with interest one period after the date of the final payment.

Explain the concept of the future value of an annuity.

Explain the concept of the present value of a single amount.

A company needs to have $200,000 in four years, and will create a fund to ensure that the $200,000 will be available. If they can earn a 7% return, how much must the company invest in the fund today to equal the $200,000 at the end of four years?

A company is setting up a sinking fund to pay off $8,654,000 in bonds that are due in seven years. The fund will earn 7% interest, and the company intends to put away a series of equal year-end amounts for seven years. What amount must the company deposit annually?

The interest rate is also called the __________________ rate.

When you reach retirement age, you will have one fund of $100,000 from which you are going to make annual withdrawals of $14,702. The fund will earn 6% per year. For how many years will you be able to draw an even amount of $14,702?

The future value of $100 compounded semiannually for three years at 12% equals $140.49.

The present value of $5,000 per year for three years at 12% compounded annually is $12,009.

The number of periods in a future value calculation can only be expressed in years.

Troy has $105,000 now. He has a loan of $175,000 that he must pay at the end of five years. He can invest his $105,000 at 10% interest compounded semiannually. Will Troy have enough to pay his loan at the end of the five years?

The number of periods in a present value calculation can only be expressed in years.

The present value of 1 formula is often useful when a borrowed asset must be repaid in full at a later date and the borrower wants to know its worth at the future date.

An annuity is a series of equal payments occurring at equal intervals.

Introducing Financial Accounting

Accounting for Transactions

Preparing Financial Statements

Accounting for Merchandising Operations

Accounting for Inventories

Accounting for Cash and Internal Controls

Accounting for Receivables

Accounting for Long-Term Assets

Accounting for Current Liabilities

Accounting for Long-Term Liabilities

Accounting for Equity

Accounting for Cash Flows

Interpreting Financial Statements

Investments and International Operations

Accounting for Partnerships

Accounting With Special Journals

Filters

Exam 14: Time Value of Money

At an annual interest rate of 8% compounded annually, $5,300 will accumulate to a total of $7,210.65 in five years.

A company has $50,000 today to invest in a fund that will earn 7%. How much will the fund contain at the end of eight years?

A company is considering investing in a project that is expected to return $350,000 four years from now. How much is the company willing to pay for this investment if the company requires a 12% return?

A company is creating a fund by depositing $65,763 today. The fund will grow to $90,000 after eight years. What annual interest rate is the company earning on the fund?

What interest rate is required to accumulate $6,802.50 in four years from an investment of $5,000?

The future value of an ordinary annuity is the accumulated value of each annuity payment with interest one period after the date of the final payment.

Explain the concept of the future value of an annuity.

Explain the concept of the present value of a single amount.

A company needs to have $200,000 in four years, and will create a fund to ensure that the $200,000 will be available. If they can earn a 7% return, how much must the company invest in the fund today to equal the $200,000 at the end of four years?

A company is setting up a sinking fund to pay off $8,654,000 in bonds that are due in seven years. The fund will earn 7% interest, and the company intends to put away a series of equal year-end amounts for seven years. What amount must the company deposit annually?

The interest rate is also called the __________________ rate.

When you reach retirement age, you will have one fund of $100,000 from which you are going to make annual withdrawals of $14,702. The fund will earn 6% per year. For how many years will you be able to draw an even amount of $14,702?

The future value of $100 compounded semiannually for three years at 12% equals $140.49.

The present value of $5,000 per year for three years at 12% compounded annually is $12,009.

The number of periods in a future value calculation can only be expressed in years.

Troy has $105,000 now. He has a loan of $175,000 that he must pay at the end of five years. He can invest his $105,000 at 10% interest compounded semiannually. Will Troy have enough to pay his loan at the end of the five years?

The number of periods in a present value calculation can only be expressed in years.

The present value of 1 formula is often useful when a borrowed asset must be repaid in full at a later date and the borrower wants to know its worth at the future date.

An annuity is a series of equal payments occurring at equal intervals.

Introducing Financial Accounting

Accounting for Transactions

Preparing Financial Statements

Accounting for Merchandising Operations

Accounting for Inventories

Accounting for Cash and Internal Controls

Accounting for Receivables

Accounting for Long-Term Assets

Accounting for Current Liabilities

Accounting for Long-Term Liabilities

Accounting for Equity

Accounting for Cash Flows

Interpreting Financial Statements

Investments and International Operations

Accounting for Partnerships

Accounting With Special Journals

Filters