Question 1

A $10,000 loan at 8% compounded quarterly, with $318.23 per quarter payments, will take 50quarters to pay off.

Accepted Answer

A) True 
 B)False

Question 2

A wealthy art collector has decided to endow her favorite art museum by establishing funds for an endowment which would provide the museum with $1,000,000 per year for acquisitions into perpetuity. The art collector will give the endowment upon her fiftieth birthday 11 years from today. She plans to accumulate the endowment by making annual end-of-year deposits into an account. The rate of interest is expected to be 6 percent in all future periods. How much must the art collector deposit each year to accumulate to the required amount?

Accepted Answer

A)  $736,000 
B)  $1,575,300 
C)  $1,264,400 
D)  $943,400 
A)  $736,000 
B)  $1,575,300 
C)  $1,264,400 
D)  $943,400

Question 3

Susan is planning to accumulate $40,000 by the end of 5 years by making 5 equal annual deposits. If she plans to make her first deposit today and can earn an annual compound rate of 9 percent on her investment, how much must each deposit be in order to accumulate the $40,000?

Accepted Answer

A)  $9,434 
B)  $23,844 
C)  $6,683 
D)  $6,132 
A)  $9,434 
B)  $23,844 
C)  $6,683 
D)  $6,132

Question 4

The nominal and effective rates are equivalent for annual compounding.

Accepted Answer

A) True 
 B)False

Question 5

An annuity with an infinite life is called

Accepted Answer

A)  a perpetuity. 
B)  an indefinite. 
C)  a deep discount. 
D)  a primia. 
A)  a perpetuity. 
B)  an indefinite. 
C)  a deep discount. 
D)  a primia.

Question 6

The future value of an ordinary annuity of $1,000 each year for 10 years, deposited at 3 percent, is ________.

Accepted Answer

A)  $ 8,530 
B)  $11,464 
C)  $10,000 
D)  $11,808 
A)  $ 8,530 
B)  $11,464 
C)  $10,000 
D)  $11,808

Question 7

An investment of $1,000 grows to $4,177 at 10% per annum in 15 years.

Accepted Answer

A) True 
 B)False

Question 8

You are looking at a new $40,000 sports car and wondering what the monthly payments will be.You plan to finance the car over five years at an interest rate of 12% compounded monthly. Yourmonthly payments will be

Accepted Answer

A)  $989. 
B)  $1,110. 
C)  $711. 
D)  $890. 
A)  $989. 
B)  $1,110. 
C)  $711. 
D)  $890.

Question 9

Young Sook owns stock in a company which has consistently paid a growing dividend over the last10 years. The first year Young Sook owned the stock, she received $4.50 per share and in the 10thyear, she received $4.92 per share. What is the growth rate of the dividends over the last 10 years?

Accepted Answer

A)  4 percent 
B)  1 percent 
C)  5 percent 
D)  2 percent 
A)  4 percent 
B)  1 percent 
C)  5 percent 
D)  2 percent

Question 10

If the present value interest factor for i percent and n periods is 0.270, the future value interest factor for the same i and n is _________.

Accepted Answer

A)  3.704 
B)  0.730 
C)  3.797 
D)  cannot be determined 
A)  3.704 
B)  0.730 
C)  3.797 
D)  cannot be determined

Question 11

The future value of an annuity of $1,000 each year for 10 years, deposited at 12 percentcompounded quarterly is ________ .

Accepted Answer

A)  $11,200 
B)  $17,549 
C)  $75,400 
D)  $93,049 
A)  $11,200 
B)  $17,549 
C)  $75,400 
D)  $93,049

Question 12

The present value of a $25,000 perpetuity at a 14 percent discount rate is________

Accepted Answer

A)  $350,000 
B)  $219,298 
C)  $178,571 
D)  $285,000 
A)  $350,000 
B)  $219,298 
C)  $178,571 
D)  $285,000

Question 13

The future value of a $10,000 annuity due, deposited at 12 percent compounded annually for each of the next 5 years is ________ .

Accepted Answer

A)  $71,154 
B)  $36,050 
C)  $40,376 
D)  $63,530 
A)  $71,154 
B)  $36,050 
C)  $40,376 
D)  $63,530

Question 14

You would like to have a $1,000,000 in 25 years at retirement. Your investments will earn 1% permonth on average. How much do you have to put away at the end of each month to meet yourobjective?

Accepted Answer

A)  $334 
B)  $419 
C)  $533 
D)  $478 
A)  $334 
B)  $419 
C)  $533 
D)  $478

Question 15

The Bank of Nova Scotia has 8% compounded semi-annual GICs; the Royal Bank has 7.9%compounded monthly GICs. The Bank of Nova Scotia offers a better annualized rate of return.

Accepted Answer

A) True 
 B)False

Question 16

The annual percentage rate (APR) is the nominal rate of interest, found by multiplying the periodic rate by the number of periods in one year.

Accepted Answer

A) True 
 B)False

Question 17

The effective rate of interest is the contractual rate of interest charged by a lender or promised by a borrower.

Accepted Answer

A) True 
 B)False

Question 18

It takes 5.34 years for money to triple in value when invested at 8% per annum.

Accepted Answer

A) True 
 B)False

Question 19

You would like to start a $1,000 per year scholarship fund for first year commerce students at theUniversity of Calgary. The first payment will be in one year from today. You will invest themonies in long-term Government of Canada bonds at 5% per annum. How large does the fund need to be to meet your objective?

Accepted Answer

A)  $25,000 
B)  $20,000 
C)  $33,333 
D)  $100,000 
A)  $25,000 
B)  $20,000 
C)  $33,333 
D)  $100,000

Question 20

The loan amortization process involves finding the future payments (over the term of the loan) whose present value at the loan interest rate equals the sum of the amount of initial principal borrowed and the amount of interest on the loan.

Accepted Answer

A) True 
 B)False

A $10,000 loan at 8% compounded quarterly, with $318.23 per quarter payments, will take 50quarters to pay off.

Susan is planning to accumulate $40,000 by the end of 5 years by making 5 equal annual deposits. If she plans to make her first deposit today and can earn an annual compound rate of 9 percent on her investment, how much must each deposit be in order to accumulate the $40,000?

The nominal and effective rates are equivalent for annual compounding.

An annuity with an infinite life is called

The future value of an ordinary annuity of $1,000 each year for 10 years, deposited at 3 percent, is ________.

An investment of $1,000 grows to $4,177 at 10% per annum in 15 years.

You are looking at a new $40,000 sports car and wondering what the monthly payments will be.You plan to finance the car over five years at an interest rate of 12% compounded monthly. Yourmonthly payments will be

Young Sook owns stock in a company which has consistently paid a growing dividend over the last10 years. The first year Young Sook owned the stock, she received $4.50 per share and in the 10thyear, she received $4.92 per share. What is the growth rate of the dividends over the last 10 years?

If the present value interest factor for i percent and n periods is 0.270, the future value interest factor for the same i and n is _________.

The future value of an annuity of $1,000 each year for 10 years, deposited at 12 percentcompounded quarterly is ________ .

The present value of a $25,000 perpetuity at a 14 percent discount rate is________

The future value of a $10,000 annuity due, deposited at 12 percent compounded annually for each of the next 5 years is ________ .

You would like to have a $1,000,000 in 25 years at retirement. Your investments will earn 1% permonth on average. How much do you have to put away at the end of each month to meet yourobjective?

The Bank of Nova Scotia has 8% compounded semi-annual GICs; the Royal Bank has 7.9%compounded monthly GICs. The Bank of Nova Scotia offers a better annualized rate of return.

The annual percentage rate (APR) is the nominal rate of interest, found by multiplying the periodic rate by the number of periods in one year.

The effective rate of interest is the contractual rate of interest charged by a lender or promised by a borrower.

It takes 5.34 years for money to triple in value when invested at 8% per annum.

The loan amortization process involves finding the future payments (over the term of the loan) whose present value at the loan interest rate equals the sum of the amount of initial principal borrowed and the amount of interest on the loan.

Overview of Corporate Finance

Financial Statements, Cash Flows, and Taxes

Financial Statement Analysis

Financial Planning and Forecasting

Financial Markets, Institutions, and Securities

Risk and Return

Valuation of Financial Securities

The Cost of Capital

Leverage and Capital Structure

Dividend Policy

Capital Budgeting: Principles and Techniques

Dealing With Project Risk and Other Topics in Capital Budgeting

Working Capital and Management of Current Assets

Management of Current Liabilities

Lease Financing: Concepts and Techniques

Corporate Securities, Derivatives, and Swaps

Mergers and Acquisitions, and Business Failure

International Corporate Finance

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Exam 6: Time Value of Money

A $10,000 loan at 8% compounded quarterly, with $318.23 per quarter payments, will take 50quarters to pay off.

Susan is planning to accumulate $40,000 by the end of 5 years by making 5 equal annual deposits. If she plans to make her first deposit today and can earn an annual compound rate of 9 percent on her investment, how much must each deposit be in order to accumulate the $40,000?

The nominal and effective rates are equivalent for annual compounding.

An annuity with an infinite life is called

The future value of an ordinary annuity of $1,000 each year for 10 years, deposited at 3 percent, is ________.

An investment of $1,000 grows to $4,177 at 10% per annum in 15 years.

You are looking at a new $40,000 sports car and wondering what the monthly payments will be.You plan to finance the car over five years at an interest rate of 12% compounded monthly. Yourmonthly payments will be

Young Sook owns stock in a company which has consistently paid a growing dividend over the last10 years. The first year Young Sook owned the stock, she received $4.50 per share and in the 10thyear, she received $4.92 per share. What is the growth rate of the dividends over the last 10 years?

If the present value interest factor for i percent and n periods is 0.270, the future value interest factor for the same i and n is _________.

The future value of an annuity of $1,000 each year for 10 years, deposited at 12 percentcompounded quarterly is ________ .

The present value of a $25,000 perpetuity at a 14 percent discount rate is________

The future value of a $10,000 annuity due, deposited at 12 percent compounded annually for each of the next 5 years is ________ .

You would like to have a $1,000,000 in 25 years at retirement. Your investments will earn 1% permonth on average. How much do you have to put away at the end of each month to meet yourobjective?

The Bank of Nova Scotia has 8% compounded semi-annual GICs; the Royal Bank has 7.9%compounded monthly GICs. The Bank of Nova Scotia offers a better annualized rate of return.

The annual percentage rate (APR) is the nominal rate of interest, found by multiplying the periodic rate by the number of periods in one year.

The effective rate of interest is the contractual rate of interest charged by a lender or promised by a borrower.

It takes 5.34 years for money to triple in value when invested at 8% per annum.

The loan amortization process involves finding the future payments (over the term of the loan) whose present value at the loan interest rate equals the sum of the amount of initial principal borrowed and the amount of interest on the loan.

Overview of Corporate Finance

Financial Statements, Cash Flows, and Taxes

Financial Statement Analysis

Financial Planning and Forecasting

Financial Markets, Institutions, and Securities

Risk and Return

Valuation of Financial Securities

The Cost of Capital

Leverage and Capital Structure

Dividend Policy

Capital Budgeting: Principles and Techniques

Dealing With Project Risk and Other Topics in Capital Budgeting

Working Capital and Management of Current Assets

Management of Current Liabilities

Lease Financing: Concepts and Techniques

Corporate Securities, Derivatives, and Swaps

Mergers and Acquisitions, and Business Failure

International Corporate Finance

Filters