Exam 6: Accounting and the Time Value of Money

A series of equal receipts at equal intervals of time when each receipt is received at the beginning of each time period is called an

Which statement is false?

On January 2, 2007, Yenn Corporation wishes to issue $2,000,000 (par value) of its 8%, 10-year bonds.The bonds pay interest annually on January 1.The current yield rate on such bonds is 10%.Using the interest factors below, compute the amount that Yenn will realize from the sale (issuance) of the bonds. Present value of 1 at 8 \% for 10 periods 0.4632 Present value of 1 at 10\% for 10 periods 0.3855 Present value of an ordinary annuity at 8\% for 10 periods 6.7101 Present value of an ordinary annuity at 10\% for 10 periods 6.1446

The future value of a deferred annuity is less than the future value of an annuity not deferred.

Which table has a factor of 1.00000 for 1 period at every interest rate?

The present value of an annuity due table is used when payments are made at the end of each period.

If an annuity due and an ordinary annuity have the same number of equal payments and the same interest rates, then

Pedigo Corporation will invest $30,000 every December 31st for the next six years (2006 - 2011).If Pedigo will earn 12% on the investment, what amount will be in the investment fund on December 31, 2011?

Use the following 8% interest factors for questions . Present Value of Future Value of Ordinary Annuity Ordinary Annuity 7 periods 5.2064 8.92280 8 periods 5.7466 10.63663 9 periods 6.2469 12.48756 -What amount should be recorded as the cost of a machine purchased December 31, 2006, which is to be financed by making 8 annual payments of $6,000 each beginning December 31, 2007? The applicable interest rate is 8%.

Finley Company will receive $500,000 in 7 years.If the appropriate interest rate is 10%, the present value of the $500,000 receipt is