Exam 14: Time Value of Money

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A $10,000, 6%, 5-year note payable that pays interest quarterly would be discounted back to its present value by using tables that would indicate which one of the following period-interest combinations?

(Multiple Choice)

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Question 41

The amount you must deposit now in your savings account, paying 6% interest, in order to accumulate $6,000 for a down payment five years from now on a new car is

(Multiple Choice)

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Question 42

Suppose you have a winning lottery ticket and you are given the option of accepting $3,000,000 three years from now or taking the present value of the $3,000,000 now.The sponsor of the prize uses a 6% discount rate.If you elect to receive the present value of the prize now, the amount you will receive is

(Multiple Choice)

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Question 43

Mandy How plans to buy an automobile and can deposit $3,000 toward the purchase today.If the annual interest rate is 8%, how much can Mandy expect to have as a down payment in three years?

(Essay)

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Question 44

Compound interest is computed on the principal and any interest earned that has not been paid or received.

(True/False)

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Question 45

The future value of 1 factor will always be

(Multiple Choice)

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Question 46

The factor 1.0609 is taken from the 3% column and 2 periods row in a certain table.From what table is this factor taken?

(Multiple Choice)

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Question 47

Which of the following discount rates will produce the smallest present value?

(Multiple Choice)

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Question 48

With a financial calculator, one can solve for any interest rate or for any number of periods in a time value of money problem.

(True/False)

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Question 49

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

(Multiple Choice)

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Question 50

If $40,000 is put in a savings account paying interest of 4% compounded annually, what amount will be in the account at the end of five years?

(Multiple Choice)

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Question 51

A higher discount rate produces a higher present value.

(True/False)

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Question 52

Showing 41 - 52 of 52

A $10,000, 6%, 5-year note payable that pays interest quarterly would be discounted back to its present value by using tables that would indicate which one of the following period-interest combinations?

The amount you must deposit now in your savings account, paying 6% interest, in order to accumulate $6,000 for a down payment five years from now on a new car is

Mandy How plans to buy an automobile and can deposit $3,000 toward the purchase today.If the annual interest rate is 8%, how much can Mandy expect to have as a down payment in three years?

Compound interest is computed on the principal and any interest earned that has not been paid or received.

The future value of 1 factor will always be

The factor 1.0609 is taken from the 3% column and 2 periods row in a certain table.From what table is this factor taken?

Which of the following discount rates will produce the smallest present value?

With a financial calculator, one can solve for any interest rate or for any number of periods in a time value of money problem.

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

If $40,000 is put in a savings account paying interest of 4% compounded annually, what amount will be in the account at the end of five years?

A higher discount rate produces a higher present value.

Accounting in Action

The Recording Process

Adjusting the Accounts

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories

Fraud, Internal Control and Cash

Accounting for Receivables

Plant Assets, Natural Resources and Intangible Assets

Liabilities

Corporations: Organisations, Stock Transactions and Stockholders Equity

Statement of Cash Flows

Financial Analysis: the Big Picture

Payroll Accounting

Other Significant Liabilities

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