Question 1

All other things being equal, which of the following would be the most attractive to an investor?

Accepted Answer

A)  A cash inflow of $10,000 in five years. 
B)  A cash inflow of $2,000 each year for the next five years. 
C)  A cash inflow of $5,000 in year 1 and $5,000 in year 5. 
D)  A cash inflow of $10,000 today. 
E)  All of these would be equally attractive to an investor. 
A)  A cash inflow of $10,000 in five years. 
B)  A cash inflow of $2,000 each year for the next five years. 
C)  A cash inflow of $5,000 in year 1 and $5,000 in year 5. 
D)  A cash inflow of $10,000 today. 
E)  All of these would be equally attractive to an investor.

Question 2

The time value of money and present value are important business concepts.

Accepted Answer

The time value of money recognizes that

Question 3

Norton Company has a 12% compound annual interest rate. If the firm invests $60,000 today, how much will have accumulated by the end of eight years?

Accepted Answer

A)  $117,600. 
B)  $148,560. 
C)  $298,080. 
D)  $738,000. 
E)  None of the answers is correct. 
A)  $117,600. 
B)  $148,560. 
C)  $298,080. 
D)  $738,000. 
E)  None of the answers is correct.

Question 4

You received a $5,000 loan at the end of each of your four years of college. Your grandparents agreed to pay off your loans at the end of your fourth year of school. Assume a 4% annual compound interest rate on student loans. Which of the following answers is the closest to the amount they will have to deposit when you start school so that they will have enough money to pay off your loans after four years? Their interest rate is 6% compounded annually.

Accepted Answer

A)  $20,000. 
B)  $21,235. 
C)  $16,813. 
D)  $15,000. 
E)  None of the answers is correct. 
A)  $20,000. 
B)  $21,235. 
C)  $16,813. 
D)  $15,000. 
E)  None of the answers is correct.

Question 5

Compound interest is interest earned not only on the principal invested but also on the interest earned in previous periods.

Accepted Answer

A) True 
 B)False

Question 6

All other things being equal, which of the following would be most attractive to an investor?

Accepted Answer

A)  A cash outflow of $60,000 in six years. 
B)  A cash outflow of $10,000 each year for the next six years. 
C)  A cash outflow of $30,000 in year 1 and $30,000 in year 6. 
D)  A cash outflow of $60,000 today. 
E)  All of these would be equally attractive to an investor. 
A)  A cash outflow of $60,000 in six years. 
B)  A cash outflow of $10,000 each year for the next six years. 
C)  A cash outflow of $30,000 in year 1 and $30,000 in year 6. 
D)  A cash outflow of $60,000 today. 
E)  All of these would be equally attractive to an investor.

Question 7

Uncle Roscoe, a wealthy relative, has given you a choice of receiving $10,000 today or $3,000 at the end of each year for the next four years. Which table factor(s) should be used to most efficiently determine the "value" of the $3,000 cash-flow stream?

Accepted Answer

A)  Future value of $1. 
B)  Future value of a $1 annuity. 
C)  Present value of $1. 
D)  Present value of a $1 annuity. 
E)  Both Present value of $1 and Present value of a $1 annuity. 
A)  Future value of $1. 
B)  Future value of a $1 annuity. 
C)  Present value of $1. 
D)  Present value of a $1 annuity. 
E)  Both Present value of $1 and Present value of a $1 annuity.

All other things being equal, which of the following would be the most attractive to an investor?

The time value of money and present value are important business concepts.

Norton Company has a 12% compound annual interest rate. If the firm invests $60,000 today, how much will have accumulated by the end of eight years?

Compound interest is interest earned not only on the principal invested but also on the interest earned in previous periods.

All other things being equal, which of the following would be most attractive to an investor?

Uncle Roscoe, a wealthy relative, has given you a choice of receiving $10,000 today or $3,000 at the end of each year for the next four years. Which table factor(s) should be used to most efficiently determine the "value" of the $3,000 cash-flow stream?

The Changing Role of Managerial Accounting in a Dynamic Business Environment

Basic Cost Management Concepts

Product Costing and Cost Accumulation in a Batch Production Environment

Process Costing and Hybrid Product-Costing Systems

Activity-Based Costing and Management

Activity Analysis, Cost Behavior, and Cost Estimation

Cost-Volume-Profit Analysis

Variable Costing and the Costs of Quality and Sustainability

Financial Planning and Analysis: the Master Budget

Standard Costing and Analysis of Direct Costs

Flexible Budgeting and Analysis of Overhead Costs

Responsibility Accounting, Operational Performance Measures, and the Balanced Scorecard

Investment Centers and Transfer Pricing

Decision Making: Relevant Costs and Benefits

Target Costing and Cost Analysis for Pricing Decisions

Capital Expenditure Decisions

Allocation of Support Activity Costs and Joint Costs

The Sarbanes-Oxley Act, Internal Controls, and Management Accounting

Inventory Management

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Exam 19: Compound Interest and the Concept of Present Value

All other things being equal, which of the following would be the most attractive to an investor?

The time value of money and present value are important business concepts.

Norton Company has a 12% compound annual interest rate. If the firm invests $60,000 today, how much will have accumulated by the end of eight years?

Compound interest is interest earned not only on the principal invested but also on the interest earned in previous periods.

All other things being equal, which of the following would be most attractive to an investor?

Uncle Roscoe, a wealthy relative, has given you a choice of receiving $10,000 today or $3,000 at the end of each year for the next four years. Which table factor(s) should be used to most efficiently determine the "value" of the $3,000 cash-flow stream?

The Changing Role of Managerial Accounting in a Dynamic Business Environment

Basic Cost Management Concepts

Product Costing and Cost Accumulation in a Batch Production Environment

Process Costing and Hybrid Product-Costing Systems

Activity-Based Costing and Management

Activity Analysis, Cost Behavior, and Cost Estimation

Cost-Volume-Profit Analysis

Variable Costing and the Costs of Quality and Sustainability

Financial Planning and Analysis: the Master Budget

Standard Costing and Analysis of Direct Costs

Flexible Budgeting and Analysis of Overhead Costs

Responsibility Accounting, Operational Performance Measures, and the Balanced Scorecard

Investment Centers and Transfer Pricing

Decision Making: Relevant Costs and Benefits

Target Costing and Cost Analysis for Pricing Decisions

Capital Expenditure Decisions

Allocation of Support Activity Costs and Joint Costs

The Sarbanes-Oxley Act, Internal Controls, and Management Accounting

Inventory Management

Filters