Question 1

If $3,000 is put in a savings account today, what amount will be available three years from today?

Accepted Answer

A) $3,000 ÷ 1.260 
B) $3,000 × 1.260 
C) $3,000 × 1.080 × 3 
D) ($3,000 × 1.080) + ($3,000 × 1.166) + ($3,000 × 1.260) 
A) $3,000 ÷ 1.260 
B) $3,000 × 1.260 
C) $3,000 × 1.080 × 3 
D) ($3,000 × 1.080) + ($3,000 × 1.166) + ($3,000 × 1.260)

Question 2

Mordica Company will receive $100,000 in 7 years.If the appropriate interest rate is 10%, the present value of the $100,000 receipt is

Accepted Answer

A) $51,000. 
B) $51,316. 
C) $151,000. 
D) $194,872. 
A) $51,000. 
B) $51,316. 
C) $151,000. 
D) $194,872.

Question 3

Find the present value of an investment in plant and equipment if it is expected to provide annual earnings of $21,000 for 15 years and to have a resale value of $40,000 at the end of that period.Assume a 10% rate and earnings at year end.The present value of 1 at 10% for 15 periods is .23939.The present value of an ordinary annuity at 10% for 15 periods is 7.60608.The future value of 1 at 10% for 15 periods is 4.17725.

Accepted Answer

A) $159,728 
B) $169,303 
C) $185,276 
D) $324,576 
A) $159,728 
B) $169,303 
C) $185,276 
D) $324,576

Question 4

Barkley Company will receive $100,000 in a future year.If the future receipt is discounted at an interest rate of 8%, its present value is $63,017.In how many years is the $100,000 received?
As per page 6-17 we have updated.

Accepted Answer

A) 5 years 
B) 6 years 
C) 7 years 
D) 8 years 
A) 5 years 
B) 6 years 
C) 7 years 
D) 8 years

Question 5

The future value of an ordinary annuity table is used when payments are invested at the beginning of each period.

Accepted Answer

A) True 
 B)False

Question 6

On December 30, 2012, AGH, Inc.purchased a machine from Grant Corp.in exchange for a zero-interest-bearing note requiring eight payments of $50,000.The first payment was made on December 30, 2012, and the others are due annually on December 30.At date of issuance, the prevailing rate of interest for this type of note was 11%.Present value factors are as follows:   On AGH's December 31, 2012 balance sheet, the net note payable to Grant is

Accepted Answer

A) $235,600. 
B) $257,300. 
C) $261,775. 
D) $285,600. 
A) $235,600. 
B) $257,300. 
C) $261,775. 
D) $285,600.

Question 7

John Jones won a lottery that will pay him $1,000,000 after twenty years.Assuming an appropriate interest rate is 5% compounded annually, what is the present value of this amount?

Accepted Answer

A) $1,000,000. 
B) $2,653,300. 
C) $12,462,210. 
D) $376,890. 
A) $1,000,000. 
B) $2,653,300. 
C) $12,462,210. 
D) $376,890.

Question 8

The future value of an annuity due factor is found by multiplying the future value of an ordinary annuity factor by 1 minus the interest rate.

Accepted Answer

A) True 
 B)False

Question 9

What would you pay for an investment that pays you $1,000,000 after forty years? Assume that the relevant interest rate for this type of investment is 6%.

Accepted Answer

A) $31,180. 
B) $311,800. 
C) $97,220. 
D) $103,670. 
A) $31,180. 
B) $311,800. 
C) $97,220. 
D) $103,670.

Question 10

Renfro Corporation will invest $30,000 every December 31st for the next six years (2012 - 2017).If Renfro will earn 12% on the investment, what amount will be in the investment fund on December 31, 2017?

Accepted Answer

A) $123,342 
B) $138,144. 
C) $243,456. 
D) $272,670. 
A) $123,342 
B) $138,144. 
C) $243,456. 
D) $272,670.

Question 11

On January 15, 2012, Dolan Corp.adopted a plan to accumulate funds for environmental improvements beginning July 1, 2016, at an estimated cost of $4,000,000.Dolan plans to make four equal annual deposits in a fund that will earn interest at 10% compounded annually.The first deposit was made on July 1, 2012.Future value factors are as follows:   Dolan should make four annual deposits of

Accepted Answer

A) $711,618. 
B) $782,779. 
C) $862,069. 
D) $1,000,000. 
A) $711,618. 
B) $782,779. 
C) $862,069. 
D) $1,000,000.

Question 12

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

Accepted Answer

A) Future value of 1 
B) Present value of 1 
C) Future value of an ordinary annuity of 1 
D) Present value of an ordinary annuity of 1 
A) Future value of 1 
B) Present value of 1 
C) Future value of an ordinary annuity of 1 
D) Present value of an ordinary annuity of 1

Question 13

Angie invested $50,000 she received from her grandmother today in a fund that is expected to earn 10% per annum.To what amount should the investment grow in five years if interest is compounded semi-annually?

Accepted Answer

A) $77,567. 
B) $80,525. 
C) $81,445. 
D) $88,578. 
A) $77,567. 
B) $80,525. 
C) $81,445. 
D) $88,578.

Question 14

Stech Co.is issuing $2.6 million 12% bonds in a private placement on July 1, 2010.Each $1,000 bond pays interest semi-annually on December 31 and June 30 of each year.The bonds mature in ten years.At the time of issuance, the market interest rate for similar types of bonds was 8%.What is the expected selling price of the bonds?

Accepted Answer

A) $3,306,705. 
B) $5,426,797. 
C) $3,297,839. 
D) $3,324,385. 
A) $3,306,705. 
B) $5,426,797. 
C) $3,297,839. 
D) $3,324,385.

Question 15

If the compounding period is less than one year, the annual interest rate must be converted to the compounding period interest rate by dividing the annual rate by the number of compounding periods per year.

Accepted Answer

A) True 
 B)False

Question 16

Hiller Corporation makes an investment today (January 1, 2012).They will receive $20,000 every December 31st for the next six years (2012 - 2017).If Hiller wants to earn 12% on the investment, what is the most they should invest on January 1, 2012?

Accepted Answer

A) $82,228. 
B) $92,096. 
C) $162,304. 
D) $181,780. 
A) $82,228. 
B) $92,096. 
C) $162,304. 
D) $181,780.

Question 17

What best describes the time value of money?

Accepted Answer

A) The interest rate charged on a loan. 
B) Accounts receivable that are determined uncollectible. 
C) An investment in a checking account. 
D) The relationship between time and money. 
A) The interest rate charged on a loan. 
B) Accounts receivable that are determined uncollectible. 
C) An investment in a checking account. 
D) The relationship between time and money.

Question 18

If you invest $50,000 to earn 8% interest, which of the following compounding approaches would return the lowest amount after one year?

Accepted Answer

A) Daily. 
B) Monthly. 
C) Quarterly. 
D) Annually. 
A) Daily. 
B) Monthly. 
C) Quarterly. 
D) Annually.

Question 19

Milner Company will invest $200,000 today.The investment will earn 6% for 5 years, with no funds withdrawn.In 5 years, the amount in the investment fund is

Accepted Answer

A) $200,000. 
B) $260,000. 
C) $267,646. 
D) $268,058. 
A) $200,000. 
B) $260,000. 
C) $267,646. 
D) $268,058.

Question 20

Which of the following situations does not base an accounting measure on present values?

Accepted Answer

A) Pensions. 
B) Prepaid insurance. 
C) Leases. 
D) Sinking funds. 
A) Pensions. 
B) Prepaid insurance. 
C) Leases. 
D) Sinking funds.

If $3,000 is put in a savings account today, what amount will be available three years from today?

Mordica Company will receive $100,000 in 7 years.If the appropriate interest rate is 10%, the present value of the $100,000 receipt is

Barkley Company will receive $100,000 in a future year.If the future receipt is discounted at an interest rate of 8%, its present value is $63,017.In how many years is the $100,000 received? As per page 6-17 we have updated.

The future value of an ordinary annuity table is used when payments are invested at the beginning of each period.

John Jones won a lottery that will pay him $1,000,000 after twenty years.Assuming an appropriate interest rate is 5% compounded annually, what is the present value of this amount?

The future value of an annuity due factor is found by multiplying the future value of an ordinary annuity factor by 1 minus the interest rate.

What would you pay for an investment that pays you $1,000,000 after forty years? Assume that the relevant interest rate for this type of investment is 6%.

Renfro Corporation will invest $30,000 every December 31st for the next six years (2012 - 2017).If Renfro will earn 12% on the investment, what amount will be in the investment fund on December 31, 2017?

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

Angie invested $50,000 she received from her grandmother today in a fund that is expected to earn 10% per annum.To what amount should the investment grow in five years if interest is compounded semi-annually?

If the compounding period is less than one year, the annual interest rate must be converted to the compounding period interest rate by dividing the annual rate by the number of compounding periods per year.

Hiller Corporation makes an investment today (January 1, 2012).They will receive $20,000 every December 31st for the next six years (2012 - 2017).If Hiller wants to earn 12% on the investment, what is the most they should invest on January 1, 2012?

What best describes the time value of money?

If you invest $50,000 to earn 8% interest, which of the following compounding approaches would return the lowest amount after one year?

Milner Company will invest $200,000 today.The investment will earn 6% for 5 years, with no funds withdrawn.In 5 years, the amount in the investment fund is

Which of the following situations does not base an accounting measure on present values?

Financial Accounting and Accounting Standards

Conceptual Framework Underlying Financial Accounting

The Accounting Information System

Income Statement and Related Information

Statement of Financial Position and Statement of Cash Flows

Cash and Receivables

Valuation of Inventories: a Cost-Basis Approach

Inventories: Additional Valuation Issues

Acquisition and Disposition of Property, Plant, and Equipment

Depreciation, Impairments, and Depletion

Intangible Assets

Current Liabilities, Provisions, and Contingencies

Non-Current Liabilities

Equity

Dilutive Securities and Earnings Per Share

Investments

Revenue

Accounting for Income Taxes

Accounting for Pensions and Postretirement Benefits

Accounting for Leases

Accounting Changes and Error Analysis

Statement of Cash Flows

Presentation and Disclosure in Financial Reporting

Filters

Exam 6: Accounting and the Time Value of Money

If $3,000 is put in a savings account today, what amount will be available three years from today?

Mordica Company will receive $100,000 in 7 years.If the appropriate interest rate is 10%, the present value of the $100,000 receipt is

Barkley Company will receive $100,000 in a future year.If the future receipt is discounted at an interest rate of 8%, its present value is $63,017.In how many years is the $100,000 received? As per page 6-17 we have updated.

The future value of an ordinary annuity table is used when payments are invested at the beginning of each period.

John Jones won a lottery that will pay him $1,000,000 after twenty years.Assuming an appropriate interest rate is 5% compounded annually, what is the present value of this amount?

The future value of an annuity due factor is found by multiplying the future value of an ordinary annuity factor by 1 minus the interest rate.

What would you pay for an investment that pays you $1,000,000 after forty years? Assume that the relevant interest rate for this type of investment is 6%.

Renfro Corporation will invest $30,000 every December 31st for the next six years (2012 - 2017).If Renfro will earn 12% on the investment, what amount will be in the investment fund on December 31, 2017?

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

Angie invested $50,000 she received from her grandmother today in a fund that is expected to earn 10% per annum.To what amount should the investment grow in five years if interest is compounded semi-annually?

If the compounding period is less than one year, the annual interest rate must be converted to the compounding period interest rate by dividing the annual rate by the number of compounding periods per year.

Hiller Corporation makes an investment today (January 1, 2012).They will receive $20,000 every December 31st for the next six years (2012 - 2017).If Hiller wants to earn 12% on the investment, what is the most they should invest on January 1, 2012?

What best describes the time value of money?

If you invest $50,000 to earn 8% interest, which of the following compounding approaches would return the lowest amount after one year?

Milner Company will invest $200,000 today.The investment will earn 6% for 5 years, with no funds withdrawn.In 5 years, the amount in the investment fund is

Which of the following situations does not base an accounting measure on present values?

Financial Accounting and Accounting Standards

Conceptual Framework Underlying Financial Accounting

The Accounting Information System

Income Statement and Related Information

Statement of Financial Position and Statement of Cash Flows

Cash and Receivables

Valuation of Inventories: a Cost-Basis Approach

Inventories: Additional Valuation Issues

Acquisition and Disposition of Property, Plant, and Equipment

Depreciation, Impairments, and Depletion

Intangible Assets

Current Liabilities, Provisions, and Contingencies

Non-Current Liabilities

Equity

Dilutive Securities and Earnings Per Share

Investments

Revenue

Accounting for Income Taxes

Accounting for Pensions and Postretirement Benefits

Accounting for Leases

Accounting Changes and Error Analysis

Statement of Cash Flows

Presentation and Disclosure in Financial Reporting

Filters