A) always exceed inflation rates. B) can decline to zero but no lower. C) can be negative, zero, or positive. D) traditionally exceed nominal rates. A) always exceed inflation rates. B) can decline to zero but no lower. C) can be negative, zero, or positive. D) traditionally exceed nominal rates.

Exam 5: The Time Value of Money

You're ready to make the last of four equal, annual payments on a $1,000 loan with a 10% interest rate.If the amount of the payment is $315.47, how much of that payment is accrued interest?

(Multiple Choice)

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Question 61

The present value of an annuity stream of $100 per year is $614 when valued at a 10% rate.By approximately how much would the value change if these were annuities due?

(Multiple Choice)

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Question 62

Your real estate agent mentions that homes in your price range require a payment of $1,200 per month for 30 years at 9% interest compounded monthly.What is the size of the mortgage with these terms?

(Multiple Choice)

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Question 63

For a given amount, the lower the discount rate, the less the present value.

(True/False)

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Question 64

A perpetuity is a special form of an annuity.

(True/False)

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Question 65

Lester's just signed a contract that will provide the firm with annual cash inflows of $28,000, $35,000, and $42,000 over the next three years with the first payment of $28,000 occurring one year from today.What is this contract worth today at a discount rate of 7.25%?

(Multiple Choice)

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Question 66

Assume your uncle recorded his salary history during a 40-year career and found that it had increased 10-fold.If inflation averaged 4% annually during the period, then over his career his purchasing power:

(Multiple Choice)

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Question 67

The APR on a loan must be equal to the effective annual rate when:

(Multiple Choice)

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Question 68

How many monthly payments remain to be paid on an 8% compounded monthly mortgage with a 30-year amortization and monthly payments of $733.76, when the balance reaches one-half of the $100,000 mortgage?

(Multiple Choice)

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Question 69

How much must be deposited today in an account earning 6% annually to accumulate a 20% down payment to use in purchasing a car one year from now, assuming that the car's current price is $20,000, and inflation will be 4%?

(Multiple Choice)

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Question 70

Real interest rates:

(Multiple Choice)

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Question 71

How much must be invested today in order to generate a 5-year annuity of $1,000 per year, with the first payment 1 year from today, at an interest rate of 12%?

(Multiple Choice)

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Question 72

The Excel function for present value is PV (rate, per, pmt, FV).

(True/False)

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Question 73

As long as the interest rate is positive, the future value will always be larger than the present value given any period of time.

(True/False)

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Question 74

To calculate present value, we discount the future value by some interest rate r, the discount rate.

(True/False)

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Question 75

Approximately how much should be accumulated by the beginning of retirement to provide a $2,500 monthly check that will last for 25 years, during which time the fund will earn 6% interest with monthly compounding?

(Multiple Choice)

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Question 76

A furniture store is offering free credit on purchases over $1,000.You observe that a big-screen television can be purchased for nothing down and $4,000 due in one year.The store next door offers an identical television for $3,650 but does not offer credit terms.Which statement below best describes the cost of the "free" credit?

(Multiple Choice)

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Question 77

What is the present value of your trust fund if you have projected that it will provide you with $50,000 on your 30th birthday (7 years from today) and it earns 10% compounded annually?

(Multiple Choice)

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Question 78

What will be the monthly payment on a home mortgage of $75,000 at 12% interest compounded monthly, to be amortized over 30 years?

(Multiple Choice)

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Question 79

Would a depositor prefer an APR of 8% with monthly compounding or an APR of 8.5% with semiannual compounding?

(Multiple Choice)

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Question 80

Showing 61 - 80 of 110

Exam 5: The Time Value of Money

You're ready to make the last of four equal, annual payments on a $1,000 loan with a 10% interest rate.If the amount of the payment is $315.47, how much of that payment is accrued interest?

The present value of an annuity stream of $100 per year is $614 when valued at a 10% rate.By approximately how much would the value change if these were annuities due?

Your real estate agent mentions that homes in your price range require a payment of $1,200 per month for 30 years at 9% interest compounded monthly.What is the size of the mortgage with these terms?

For a given amount, the lower the discount rate, the less the present value.

A perpetuity is a special form of an annuity.

Lester's just signed a contract that will provide the firm with annual cash inflows of $28,000, $35,000, and $42,000 over the next three years with the first payment of $28,000 occurring one year from today.What is this contract worth today at a discount rate of 7.25%?

Assume your uncle recorded his salary history during a 40-year career and found that it had increased 10-fold.If inflation averaged 4% annually during the period, then over his career his purchasing power:

The APR on a loan must be equal to the effective annual rate when:

How many monthly payments remain to be paid on an 8% compounded monthly mortgage with a 30-year amortization and monthly payments of $733.76, when the balance reaches one-half of the $100,000 mortgage?

How much must be deposited today in an account earning 6% annually to accumulate a 20% down payment to use in purchasing a car one year from now, assuming that the car's current price is $20,000, and inflation will be 4%?

Real interest rates:

How much must be invested today in order to generate a 5-year annuity of $1,000 per year, with the first payment 1 year from today, at an interest rate of 12%?

The Excel function for present value is PV (rate, per, pmt, FV).

As long as the interest rate is positive, the future value will always be larger than the present value given any period of time.

To calculate present value, we discount the future value by some interest rate r, the discount rate.

Approximately how much should be accumulated by the beginning of retirement to provide a $2,500 monthly check that will last for 25 years, during which time the fund will earn 6% interest with monthly compounding?

What is the present value of your trust fund if you have projected that it will provide you with $50,000 on your 30th birthday (7 years from today) and it earns 10% compounded annually?

What will be the monthly payment on a home mortgage of $75,000 at 12% interest compounded monthly, to be amortized over 30 years?

Would a depositor prefer an APR of 8% with monthly compounding or an APR of 8.5% with semiannual compounding?

Goals and Governance of the Firm

Financial Markets and Institutions

Accounting and Finance

Measuring Corporate Performance

Valuing Bonds

Valuing Stocks

Net Present Value and Other Investment Criteria

Using Discounted Cash Flow Analysis to Make Investment Decisions

Project Analysis

Introduction to Risk, Return, and the Opportunity Cost of Capital

Risk, Return, and Capital Budgeting

The Weighted-Average Cost of Capital and Company Valuation

Introduction to Corporate Financing and Governance

Venture Capital, Ipos, and Seasoned Offerings

Debt Policy

Leasing

Payout Policy

Long-Term Financial Planning

Short-Term Financial Planning

Cash and Inventory Management

Credit Management and Collection

Mergers, Acquisitions, and Corporate Control

International Financial Management

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