Question 1

What is the relationship between the future value of one and the present value of one?

Accepted Answer

A) The present value of one equals the future value of one plus one. 
B) The present value of one equals one plus future value factor for n-1 periods. 
C) The present value of one equals one divided by the future value of one. 
D) The present value of one equals one plus the future value factor for n+1 value 
A) The present value of one equals the future value of one plus one. 
B) The present value of one equals one plus future value factor for n-1 periods. 
C) The present value of one equals one divided by the future value of one. 
D) The present value of one equals one plus the future value factor for n+1 value

Question 2

Sue Gray wants to invest a certain sum of money at the end of each year for five years.The investment will earn 6% compounded annually.At the end of five years, she will need a total of $40,000 accumulated.How should she compute her required annual invest-ment?

Accepted Answer

A) $40,000 times the future value of a 5-year, 6% ordinary annuity of 1. 
B) $40,000 divided by the future value of a 5-year, 6% ordinary annuity of 1. 
C) $40,000 times the present value of a 5-year, 6% ordinary annuity of 1. 
D) $40,000 divided by the present value of a 5-year, 6% ordinary annuity of 1. 
A) $40,000 times the future value of a 5-year, 6% ordinary annuity of 1. 
B) $40,000 divided by the future value of a 5-year, 6% ordinary annuity of 1. 
C) $40,000 times the present value of a 5-year, 6% ordinary annuity of 1. 
D) $40,000 divided by the present value of a 5-year, 6% ordinary annuity of 1.

Question 3

Charlie Corp.is purchasing new equipment with a cash cost of $100,000 for the assembly line.The manufacturer has offered to accept $22,960 payments at the end of each of the next six years.What is the interest rate that Charlie Corp.will be paying?

Accepted Answer

A) 8%. 
B) 9%. 
C) 10%. 
D) 11%. 
A) 8%. 
B) 9%. 
C) 10%. 
D) 11%.

Question 4

Compound interest, rather than simple interest, must be used to properly evaluate long- term investment proposals.

Accepted Answer

A) True 
 B)False

Question 5

What amount should be deposited in a bank account today to grow to $10,000 three years from today?

Accepted Answer

A) $10,000 × 1.260 
B) $10,000 × 1.260 × 3 
C) $10,000 ÷ 1.260 
D) $10,000 ÷ 1.080 × 3 
A) $10,000 × 1.260 
B) $10,000 × 1.260 × 3 
C) $10,000 ÷ 1.260 
D) $10,000 ÷ 1.080 × 3

Question 6

What would you pay for an investment that pays you $10,000 at the end of each year for the next twenty years? Assume that the relevant interest rate for this type of investment is 12%.

Accepted Answer

A) $83,658. 
B) $720,524. 
C) $10,367. 
D) $74,694. 
A) $83,658. 
B) $720,524. 
C) $10,367. 
D) $74,694.

Question 7

The unknown present value is always a larger amount than the known future value because dollars received currently are worth more than dollars to be received in the future.

Accepted Answer

A) True 
 B)False

Question 8

The market price of a $200,000, ten-year, 12% (pays interest semiannually) bond issue sold to yield an effective rate of 10% is

Accepted Answer

A) $224,578. 
B) $224,925. 
C) $226,654. 
D) $374,472. 
A) $224,578. 
B) $224,925. 
C) $226,654. 
D) $374,472.

Question 9

If a savings account pays interest at 4% compounded quarterly, then the amount of $1 left on deposit for 8 years would be found in a table using

Accepted Answer

A) 8 periods at 4%. 
B) 8 periods at 1%. 
C) 32 periods at 4%. 
D) 32 periods at 1%. 
A) 8 periods at 4%. 
B) 8 periods at 1%. 
C) 32 periods at 4%. 
D) 32 periods at 1%.

Question 10

Jeremy Leasing purchases and then leases small aircraft to interested parties.The company is currently determining the required rental for a small aircraft that cost them $400,000.If the lease is for twenty years and annual lease payments are required to be made at the end of each year, what will be the annual rental if Jeremy wants to earn a return of 10%?

Accepted Answer

A) $42,713. 
B) $46,984. 
C) $6,984. 
D) $20,209. 
A) $42,713. 
B) $46,984. 
C) $6,984. 
D) $20,209.

Question 11

What would you pay for an investment that pays you $12,000 at the beginning of each year for the next ten years? Assume that the relevant interest rate for this type of investment is 10%.

Accepted Answer

A) $73,734. 
B) $81,108. 
C) $77,941. 
D) $85,735. 
A) $73,734. 
B) $81,108. 
C) $77,941. 
D) $85,735.

Question 12

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

Accepted Answer

A) True 
 B)False

Question 13

Vannoy Corporation will invest $25,000 every January 1st for the next six years (2012 - 2017).If Wagner will earn 12% on the investment, what amount will be in the investment fund on December 31, 2017?

Accepted Answer

A) $102,785. 
B) $115,120. 
C) $202,880. 
D) $227,225. 
A) $102,785. 
B) $115,120. 
C) $202,880. 
D) $227,225.

Question 14

Use the following 8% interest factors for questions .  
-If $5,000 is deposited annually starting on January 1, 2012 and it earns 8%, what will the balance be on December 31, 2019?

Accepted Answer

A) $44,614 
B) $48,183 
C) $53,183 
D) $57,438 
A) $44,614 
B) $48,183 
C) $53,183 
D) $57,438

Question 15

Which table would show the largest factor for an interest rate of 8% for five periods?

Accepted Answer

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

Question 16

A machine is purchased by making payments of $5,000 at the beginning of each of the next five years.The interest rate was 10%.The future value of an ordinary annuity of 1 for five periods is 6.10510.The present value of an ordinary annuity of 1 for five periods is 3.79079.What was the cost of the machine?

Accepted Answer

A) $33,578 
B) $30,526 
C) $20,849 
D) $18,954 
A) $33,578 
B) $30,526 
C) $20,849 
D) $18,954

Question 17

Under iGAAP, if an estimate is being developed for a large number of items with varied outcomes, then the expected cash flow approach is used.

Accepted Answer

A) True 
 B)False

Question 18

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

Accepted Answer

A) $255,000. 
B) $256,580. 
C) $755,000. 
D) $974,360. 
A) $255,000. 
B) $256,580. 
C) $755,000. 
D) $974,360.

What is the relationship between the future value of one and the present value of one?

Sue Gray wants to invest a certain sum of money at the end of each year for five years.The investment will earn 6% compounded annually.At the end of five years, she will need a total of $40,000 accumulated.How should she compute her required annual invest-ment?

Charlie Corp.is purchasing new equipment with a cash cost of $100,000 for the assembly line.The manufacturer has offered to accept $22,960 payments at the end of each of the next six years.What is the interest rate that Charlie Corp.will be paying?

Compound interest, rather than simple interest, must be used to properly evaluate long- term investment proposals.

What amount should be deposited in a bank account today to grow to $10,000 three years from today?

What would you pay for an investment that pays you $10,000 at the end of each year for the next twenty years? Assume that the relevant interest rate for this type of investment is 12%.

The unknown present value is always a larger amount than the known future value because dollars received currently are worth more than dollars to be received in the future.

The market price of a $200,000, ten-year, 12% (pays interest semiannually) bond issue sold to yield an effective rate of 10% is

If a savings account pays interest at 4% compounded quarterly, then the amount of $1 left on deposit for 8 years would be found in a table using

What would you pay for an investment that pays you $12,000 at the beginning of each year for the next ten years? Assume that the relevant interest rate for this type of investment is 10%.

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

Vannoy Corporation will invest $25,000 every January 1st for the next six years (2012 - 2017).If Wagner will earn 12% on the investment, what amount will be in the investment fund on December 31, 2017?

Use the following 8% interest factors for questions . -If $5,000 is deposited annually starting on January 1, 2012 and it earns 8%, what will the balance be on December 31, 2019?

Which table would show the largest factor for an interest rate of 8% for five periods?

Under iGAAP, if an estimate is being developed for a large number of items with varied outcomes, then the expected cash flow approach is used.

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

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

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Exam 6: Accounting and the Time Value of Money

What is the relationship between the future value of one and the present value of one?

Sue Gray wants to invest a certain sum of money at the end of each year for five years.The investment will earn 6% compounded annually.At the end of five years, she will need a total of $40,000 accumulated.How should she compute her required annual invest-ment?

Charlie Corp.is purchasing new equipment with a cash cost of $100,000 for the assembly line.The manufacturer has offered to accept $22,960 payments at the end of each of the next six years.What is the interest rate that Charlie Corp.will be paying?

Compound interest, rather than simple interest, must be used to properly evaluate long- term investment proposals.

What amount should be deposited in a bank account today to grow to $10,000 three years from today?

What would you pay for an investment that pays you $10,000 at the end of each year for the next twenty years? Assume that the relevant interest rate for this type of investment is 12%.

The unknown present value is always a larger amount than the known future value because dollars received currently are worth more than dollars to be received in the future.

The market price of a $200,000, ten-year, 12% (pays interest semiannually) bond issue sold to yield an effective rate of 10% is

If a savings account pays interest at 4% compounded quarterly, then the amount of $1 left on deposit for 8 years would be found in a table using

What would you pay for an investment that pays you $12,000 at the beginning of each year for the next ten years? Assume that the relevant interest rate for this type of investment is 10%.

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

Vannoy Corporation will invest $25,000 every January 1st for the next six years (2012 - 2017).If Wagner will earn 12% on the investment, what amount will be in the investment fund on December 31, 2017?

Use the following 8% interest factors for questions . -If $5,000 is deposited annually starting on January 1, 2012 and it earns 8%, what will the balance be on December 31, 2019?

Which table would show the largest factor for an interest rate of 8% for five periods?

Under iGAAP, if an estimate is being developed for a large number of items with varied outcomes, then the expected cash flow approach is used.

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

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