Question 1

is the PV of an ordinary annuity with 5 payments of $4,700 if the appropriate interest rate is 4.5%?

Accepted Answer

A) $16,806 
B) $17,690 
C) $18,621 
D) $19,601 
E) $20,633 
A) $16,806 
B) $17,690 
C) $18,621 
D) $19,601 
E) $20,633

Question 2

Chuck has $2,500 invested in a bank that pays 4% annually.How long will it take for his funds to double?

Accepted Answer

A) 14.39 
B) 15.15 
C) 15.95 
D) 16.79 
E) 17.67 
A) 14.39 
B) 15.15 
C) 15.95 
D) 16.79 
E) 17.67

Question 3

uncle is about to retire, and he wants to buy an annuity that will provide him with $75,000 of income a year for 20 years, with the first payment coming immediately.The going rate on such annuities is 5.25%.How much would it cost him to buy the annuity today?

Accepted Answer

A) $825,835 
B) $869,300 
C) $915,052 
D) $963,213 
E) $1,011,374 
A) $825,835 
B) $869,300 
C) $915,052 
D) $963,213 
E) $1,011,374

Question 4

Suppose you deposited $5,000 in a bank account that pays 5.25% with daily compounding based on a 360-day year.How much would be in the account after 8 months, assuming each month has 30 days?

Accepted Answer

A) $5,178.09 
B) $5,436.99 
C) $5,708.84 
D) $5,994.28 
E) $6,294.00 
A) $5,178.09 
B) $5,436.99 
C) $5,708.84 
D) $5,994.28 
E) $6,294.00

Question 5

uncle will sell you his bicycle shop for $250,000, with "seller financing," at a 6.0% nominal annual rate.The terms of the loan would require you to make 12 equal end-of-month payments per year for 4 years, and then make an additional final (balloon) payment of $50,000 at the end of the last month.What would your equal monthly payments be?

Accepted Answer

A) $4,029.37 
B) $4,241.44 
C) $4,464.67 
D) $4,699.66 
E) $4,947.01 
A) $4,029.37 
B) $4,241.44 
C) $4,464.67 
D) $4,699.66 
E) $4,947.01

Question 6

Which of the following statements is CORRECT?

Accepted Answer

A) The cash flows for an ordinary (or deferred) annuity all occur at the beginning of the periods. 
B) If a series of unequal cash flows occurs at regular intervals, such as once a year, then the series is by definition an annuity. 
C) The cash flows for an annuity due must all occur at the ends of the periods. 
D) The cash flows for an annuity must all be equal, and they must occur at regular intervals, such as once a year or once a month. 
E) If some cash flows occur at the beginning of the periods while others occur at the ends, then we have what the textbook defines as a variable annuity. 
A) The cash flows for an ordinary (or deferred) annuity all occur at the beginning of the periods. 
B) If a series of unequal cash flows occurs at regular intervals, such as once a year, then the series is by definition an annuity. 
C) The cash flows for an annuity due must all occur at the ends of the periods. 
D) The cash flows for an annuity must all be equal, and they must occur at regular intervals, such as once a year or once a month. 
E) If some cash flows occur at the beginning of the periods while others occur at the ends, then we have what the textbook defines as a variable annuity.

Question 7

agree to make 24 deposits of $500 at the beginning of each month into a bank account.At the end of the 24th month, you will have $13,000 in your account.If the bank compounds interest monthly, what nominal annual interest rate will you be earning?

Accepted Answer

A) 7.62% 
B) 8.00% 
C) 8.40% 
D) 8.82% 
E) 9.26% 
A) 7.62% 
B) 8.00% 
C) 8.40% 
D) 8.82% 
E) 9.26%

Question 8

years ago, Spielberg Inc.earned $0.50 per share.Its earnings this year were $2.20.What was the growth rate in earnings per share (EPS) over the 10-year period?

Accepted Answer

A) 15.17% 
B) 15.97% 
C) 16.77% 
D) 17.61% 
E) 18.49% 
A) 15.17% 
B) 15.97% 
C) 16.77% 
D) 17.61% 
E) 18.49%

Question 9

much would $20,000 due in 50 years be worth today if the discount rate were 7.5%?

Accepted Answer

A) $438.03 
B) $461.08 
C) $485.35 
D) $510.89 
E) $537.78 
A) $438.03 
B) $461.08 
C) $485.35 
D) $510.89 
E) $537.78

Question 10

Ellen now has $125.How much would she have after 8 years if she leaves it invested at 8.5% with annual compounding?

Accepted Answer

A) $205.83 
B) $216.67 
C) $228.07 
D) $240.08 
E) $252.08 
A) $205.83 
B) $216.67 
C) $228.07 
D) $240.08 
E) $252.08

Question 11

Suppose an ExxonMobil Corporation bond will pay $4,500 ten years from now.If the going interest rate on safe 10-year bonds is 4.25%, how much is the bond worth today?

Accepted Answer

A) $2,819.52 
B) $2,967.92 
C) $3,116.31 
D) $3,272.13 
E) $3,435.74 
A) $2,819.52 
B) $2,967.92 
C) $3,116.31 
D) $3,272.13 
E) $3,435.74

Question 12

payment made each period on an amortized loan is constant, and it consists of some interest and some principal.The closer we are to the end of the loan's life, the smaller the percentage of the payment that will be a repayment of principal.

Accepted Answer

A) True 
 B)False

Question 13

we are given a periodic interest rate, say a monthly rate, we can find the nominal annual rate by multiplying the periodic rate by the number of periods per year.

Accepted Answer

A) True 
 B)False

Question 14

Suppose you borrowed $14,000 at a rate of 10.0% and must repay it in 5 equal installments at the end of each of the next 5 years.How much interest would you have to pay in the first year?

Accepted Answer

A) $1,200.33 
B) $1,263.50 
C) $1,330.00 
D) $1,400.00 
E) $1,470.00 
A) $1,200.33 
B) $1,263.50 
C) $1,330.00 
D) $1,400.00 
E) $1,470.00

Question 15

want to quit your job and go back to school for a law degree 4 years from now, and you plan to save $3,500 per year, beginning immediately.You will make 4 deposits in an account that pays 5.7% interest.Under these assumptions, how much will you have 4 years from today?

Accepted Answer

A) $16,112 
B) $16,918 
C) $17,763 
D) $18,652 
E) $19,584 
A) $16,112 
B) $16,918 
C) $17,763 
D) $18,652 
E) $19,584

Question 16

plan to invest in bonds that pay 6.0%, compounded annually.If you invest $10,000 today, how many years will it take for your investment to grow to $30,000?

Accepted Answer

A) 12.37 
B) 13.74 
C) 15.27 
D) 16.97 
E) 18.85 
A) 12.37 
B) 13.74 
C) 15.27 
D) 16.97 
E) 18.85

Question 17

What's the present value of a perpetuity that pays $250 per year if the appropriate interest rate is 5%?

Accepted Answer

A) $4,750 
B) $5,000 
C) $5,250 
D) $5,513 
E) $5,788 
A) $4,750 
B) $5,000 
C) $5,250 
D) $5,513 
E) $5,788

Question 18

Pasco Co.borrowed $20,000 at a rate of 7.25%, simple interest, with interest paid at the end of each month.The bank uses a 360-day year.How much interest would Pasco have to pay in a 30-day month?

Accepted Answer

A) $120.83 
B) $126.88 
C) $133.22 
D) $139.88 
E) $146.87 
A) $120.83 
B) $126.88 
C) $133.22 
D) $139.88 
E) $146.87

Question 19

uncle has $375,000 and wants to retire.He expects to live for another 25 years, and he also expects to earn 7.5% on his invested funds.How much could he withdraw at the beginning of each of the next 25 years and end up with zero in the account?

Accepted Answer

A) $28,243.21 
B) $29,729.70 
C) $31,294.42 
D) $32,859.14 
E) $34,502.10 
A) $28,243.21 
B) $29,729.70 
C) $31,294.42 
D) $32,859.14 
E) $34,502.10

Question 20

company has just taken out a 1-year installment loan for $72,500 at a nominal rate of 11.0% but with equal end-of-month payments.What percentage of the 2nd monthly payment will go toward the repayment of principal?

Accepted Answer

A) 73.67% 
B) 77.55% 
C) 81.63% 
D) 85.93% 
E) 90.45% 
A) 73.67% 
B) 77.55% 
C) 81.63% 
D) 85.93% 
E) 90.45%

is the PV of an ordinary annuity with 5 payments of $4,700 if the appropriate interest rate is 4.5%?

Chuck has $2,500 invested in a bank that pays 4% annually.How long will it take for his funds to double?

uncle is about to retire, and he wants to buy an annuity that will provide him with $75,000 of income a year for 20 years, with the first payment coming immediately.The going rate on such annuities is 5.25%.How much would it cost him to buy the annuity today?

Suppose you deposited $5,000 in a bank account that pays 5.25% with daily compounding based on a 360-day year.How much would be in the account after 8 months, assuming each month has 30 days?

Which of the following statements is CORRECT?

agree to make 24 deposits of $500 at the beginning of each month into a bank account.At the end of the 24th month, you will have $13,000 in your account.If the bank compounds interest monthly, what nominal annual interest rate will you be earning?

years ago, Spielberg Inc.earned $0.50 per share.Its earnings this year were $2.20.What was the growth rate in earnings per share (EPS) over the 10-year period?

much would $20,000 due in 50 years be worth today if the discount rate were 7.5%?

Ellen now has $125.How much would she have after 8 years if she leaves it invested at 8.5% with annual compounding?

Suppose an ExxonMobil Corporation bond will pay $4,500 ten years from now.If the going interest rate on safe 10-year bonds is 4.25%, how much is the bond worth today?

payment made each period on an amortized loan is constant, and it consists of some interest and some principal.The closer we are to the end of the loan's life, the smaller the percentage of the payment that will be a repayment of principal.

we are given a periodic interest rate, say a monthly rate, we can find the nominal annual rate by multiplying the periodic rate by the number of periods per year.

Suppose you borrowed $14,000 at a rate of 10.0% and must repay it in 5 equal installments at the end of each of the next 5 years.How much interest would you have to pay in the first year?

want to quit your job and go back to school for a law degree 4 years from now, and you plan to save $3,500 per year, beginning immediately.You will make 4 deposits in an account that pays 5.7% interest.Under these assumptions, how much will you have 4 years from today?

plan to invest in bonds that pay 6.0%, compounded annually.If you invest $10,000 today, how many years will it take for your investment to grow to $30,000?

What's the present value of a perpetuity that pays $250 per year if the appropriate interest rate is 5%?

Pasco Co.borrowed $20,000 at a rate of 7.25%, simple interest, with interest paid at the end of each month.The bank uses a 360-day year.How much interest would Pasco have to pay in a 30-day month?

uncle has $375,000 and wants to retire.He expects to live for another 25 years, and he also expects to earn 7.5% on his invested funds.How much could he withdraw at the beginning of each of the next 25 years and end up with zero in the account?

company has just taken out a 1-year installment loan for $72,500 at a nominal rate of 11.0% but with equal end-of-month payments.What percentage of the 2nd monthly payment will go toward the repayment of principal?

Overview

Statements, CF, Taxes

Financial Analysis

Bonds

Risk and Return

Stocks

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Cost of Capital

Capital Budgeting

Cash Flow and Risk

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Exam 4: Time Value of Money

is the PV of an ordinary annuity with 5 payments of $4,700 if the appropriate interest rate is 4.5%?

Chuck has $2,500 invested in a bank that pays 4% annually.How long will it take for his funds to double?

uncle is about to retire, and he wants to buy an annuity that will provide him with $75,000 of income a year for 20 years, with the first payment coming immediately.The going rate on such annuities is 5.25%.How much would it cost him to buy the annuity today?

Suppose you deposited $5,000 in a bank account that pays 5.25% with daily compounding based on a 360-day year.How much would be in the account after 8 months, assuming each month has 30 days?

Which of the following statements is CORRECT?

agree to make 24 deposits of $500 at the beginning of each month into a bank account.At the end of the 24th month, you will have $13,000 in your account.If the bank compounds interest monthly, what nominal annual interest rate will you be earning?

years ago, Spielberg Inc.earned $0.50 per share.Its earnings this year were $2.20.What was the growth rate in earnings per share (EPS) over the 10-year period?

much would $20,000 due in 50 years be worth today if the discount rate were 7.5%?

Ellen now has $125.How much would she have after 8 years if she leaves it invested at 8.5% with annual compounding?

Suppose an ExxonMobil Corporation bond will pay $4,500 ten years from now.If the going interest rate on safe 10-year bonds is 4.25%, how much is the bond worth today?

payment made each period on an amortized loan is constant, and it consists of some interest and some principal.The closer we are to the end of the loan's life, the smaller the percentage of the payment that will be a repayment of principal.

we are given a periodic interest rate, say a monthly rate, we can find the nominal annual rate by multiplying the periodic rate by the number of periods per year.

Suppose you borrowed $14,000 at a rate of 10.0% and must repay it in 5 equal installments at the end of each of the next 5 years.How much interest would you have to pay in the first year?

want to quit your job and go back to school for a law degree 4 years from now, and you plan to save $3,500 per year, beginning immediately.You will make 4 deposits in an account that pays 5.7% interest.Under these assumptions, how much will you have 4 years from today?

plan to invest in bonds that pay 6.0%, compounded annually.If you invest $10,000 today, how many years will it take for your investment to grow to $30,000?

What's the present value of a perpetuity that pays $250 per year if the appropriate interest rate is 5%?

Pasco Co.borrowed $20,000 at a rate of 7.25%, simple interest, with interest paid at the end of each month.The bank uses a 360-day year.How much interest would Pasco have to pay in a 30-day month?

uncle has $375,000 and wants to retire.He expects to live for another 25 years, and he also expects to earn 7.5% on his invested funds.How much could he withdraw at the beginning of each of the next 25 years and end up with zero in the account?

company has just taken out a 1-year installment loan for $72,500 at a nominal rate of 11.0% but with equal end-of-month payments.What percentage of the 2nd monthly payment will go toward the repayment of principal?

Overview

Statements, CF, Taxes

Financial Analysis

Bonds

Risk and Return

Stocks

Financial Options

Cost of Capital

Capital Budgeting

Cash Flow and Risk

Forecasting

Valuation, Governanc

Dividends

CAP Structure

Working Capital

Multinational

Filters