Exam 7: The Time Value of Money

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A person has an individual retirement account and can deposit $2,000 a year. What will be the difference in the amount in the account if this investor earns 8% instead of 6%?

(Essay)

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Question 41

An investment is expected to generate $1,000,000 each year for 4 years. If the firm's cost of funds is 10%, what is the maximum amount the firm should pay for the investment?

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Question 42

For investors, an annuity due

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Question 43

An employee and employer contribute $3,000 annually for 20 years to a retirement account that earns 9 percent a year, how much will the employee be able to withdraw from the account for 25 years?

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Question 44

You purchase a home for $100,000 with a 20-year mortgage at 12%. If you make annual mortgage payments that pay the interest and reduce the principal, by how much is the loan reduced at the end of the first year?

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Question 45

In an ordinary annuity, the payments are made at the beginning of the year.

(True/False)

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Question 46

Discounting refers to the process of bringing the future back to the present.

(True/False)

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Question 47

The present value of an annuity due

(Multiple Choice)

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Question 48

You borrow $100,000 to buy a house; if the annual interest rate is 6% and the term of the loan is 20 years, what is the annual payment required to retire the mortgage loan?

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Question 49

You are offered two jobs. One initially pays $45,000 annually, and your salary will grow annually at 10%. The other pays $42,000 annually, but your salary will grow at 12%. After 10 years, which job pays the higher salary?

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Question 50

An annuity offers $1,000 for 10 years. If you can earn 12 percent annually on your funds, what is the maximum amount you should pay for this annuity?

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Question 51

An apartment will generate $12,000 a year for 5 years, after which you expect to sell the property for $100,000. What is the maximum you should pay for the property if your cost of money is 10%?

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Question 52

It takes longer than 8 years to retire a $24,000 loan at 8% if the annual payment is $3,000.

(True/False)

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Question 53

Showing 41 - 53 of 53

Exam 7: The Time Value of Money

A person has an individual retirement account and can deposit $2,000 a year. What will be the difference in the amount in the account if this investor earns 8% instead of 6%?​

​An investment is expected to generate $1,000,000 each year for 4 years. If the firm's cost of funds is 10%, what is the maximum amount the firm should pay for the investment?

For investors, an annuity due ​

An employee and employer contribute $3,000 annually for 20 years to a retirement account that earns 9 percent a year, how much will the employee be able to withdraw from the account for 25 years?​

You purchase a home for $100,000 with a 20-year mortgage at 12%. If you make annual mortgage payments that pay the interest and reduce the principal, by how much is the loan reduced at the end of the first year?​

In an ordinary annuity, the payments are made at the beginning of the year.​

Discounting refers to the process of bringing the future back to the present.​

​The present value of an annuity due

​You borrow $100,000 to buy a house; if the annual interest rate is 6% and the term of the loan is 20 years, what is the annual payment required to retire the mortgage loan?

You are offered two jobs. One initially pays $45,000 annually, and your salary will grow annually at 10%. The other pays $42,000 annually, but your salary will grow at 12%. After 10 years, which job pays the higher salary?​

An annuity offers $1,000 for 10 years. If you can earn 12 percent annually on your funds, what is the maximum amount you should pay for this annuity?​

An apartment will generate $12,000 a year for 5 years, after which you expect to sell the property for $100,000. What is the maximum you should pay for the property if your cost of money is 10%?​

It takes longer than 8 years to retire a $24,000 loan at 8% if the annual payment is $3,000.​

The Role of Financial Markets and Financial Intermediaries

Investment Banking

Securities Markets

The Federal Reserve

International Currency Flows

Risk and Its Measurement

Analysis of Financial Statements

The Features of Stock

Stock Valuation

The Features of Long-Term Debt - Bonds

Bond Pricing and Yields

Preferred Stock

Convertile Securities

Investment Returns

Investment Companies

Forms of Businss and Corporate Taxation

Break-Even Analysis and the Payback Period

Leverage

Cost of Capital

Capital Budgeting

Forecasting

Cash Budgeting

Management of Current Assets

Management of Short-Term Liabilities

Intermediate-Term Debt and Leasing

Options: Puts and Calls

Futures and Swaps

Filters

A person has an individual retirement account and can deposit $2,000 a year. What will be the difference in the amount in the account if this investor earns 8% instead of 6%?

An investment is expected to generate $1,000,000 each year for 4 years. If the firm's cost of funds is 10%, what is the maximum amount the firm should pay for the investment?

For investors, an annuity due

An employee and employer contribute $3,000 annually for 20 years to a retirement account that earns 9 percent a year, how much will the employee be able to withdraw from the account for 25 years?

You purchase a home for $100,000 with a 20-year mortgage at 12%. If you make annual mortgage payments that pay the interest and reduce the principal, by how much is the loan reduced at the end of the first year?

In an ordinary annuity, the payments are made at the beginning of the year.

Discounting refers to the process of bringing the future back to the present.

The present value of an annuity due

You borrow $100,000 to buy a house; if the annual interest rate is 6% and the term of the loan is 20 years, what is the annual payment required to retire the mortgage loan?

You are offered two jobs. One initially pays $45,000 annually, and your salary will grow annually at 10%. The other pays $42,000 annually, but your salary will grow at 12%. After 10 years, which job pays the higher salary?

An annuity offers $1,000 for 10 years. If you can earn 12 percent annually on your funds, what is the maximum amount you should pay for this annuity?

An apartment will generate $12,000 a year for 5 years, after which you expect to sell the property for $100,000. What is the maximum you should pay for the property if your cost of money is 10%?

It takes longer than 8 years to retire a $24,000 loan at 8% if the annual payment is $3,000.