Question 1

Explain how you would compute the imputed interest on cash borrowed at 0% interest when the market rate of interest is 8%.

Accepted Answer

Imputed interest on a 0% interest loan i

Question 2

Present and future value tables of $1 at 3% are presented below:
 
-A firm leases equipment under a long-term lease (analogous to an installment purchase) that calls for 12 semiannual payments of $39,014.40. The first payment is due at the inception of the lease. The annual rate on the lease is 6%. What is the value of the leased asset at inception of the lease?

Accepted Answer

A)  $388,349. 
B)  $400,000. 
C)  $454,128. 
D)  $440,082. 
A)  $388,349. 
B)  $400,000. 
C)  $454,128. 
D)  $440,082.

Question 3

An investor purchases a 20-year, $1,000 par value bond that pays semiannual interest of $40. If the semiannual market rate of interest is 5%, what is the current market value of the bond? (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1)

Accepted Answer

A)  $828. 
B)  $1,686. 
C)  $1,000. 
D)  $893. 
A)  $828. 
B)  $1,686. 
C)  $1,000. 
D)  $893.

Question 4

Below are excerpts from time value of money tables for the 8% rate.
 
-Column 5 is an interest table for the:

Accepted Answer

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

Question 5

George Jones is planning on a cruise for his 70th birthday party. He wants to know how much he should set aside at the beginning of each month at 6% interest to accumulate the sum of $4,800 in five years. He should use a table for the:

Accepted Answer

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

Question 6

First Financial Auto Loan Department wishes to know the payment required at the first of each month on a $10,500, 48-month, 11% auto loan. To determine this amount, First Financial would:

Accepted Answer

A)  Multiply $10,500 by the present value of $1. 
B)  Divide $10,500 by the future value of an ordinary annuity of $1. 
C)  Divide $10,500 by the present value of an annuity due of $1. 
D)  Multiply $10,500 by the present value of an ordinary annuity of $1. 
A)  Multiply $10,500 by the present value of $1. 
B)  Divide $10,500 by the future value of an ordinary annuity of $1. 
C)  Divide $10,500 by the present value of an annuity due of $1. 
D)  Multiply $10,500 by the present value of an ordinary annuity of $1.

Explain how you would compute the imputed interest on cash borrowed at 0% interest when the market rate of interest is 8%.

An investor purchases a 20-year, $1,000 par value bond that pays semiannual interest of $40. If the semiannual market rate of interest is 5%, what is the current market value of the bond? (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1)

Below are excerpts from time value of money tables for the 8% rate. -Column 5 is an interest table for the:

George Jones is planning on a cruise for his 70^th birthday party. He wants to know how much he should set aside at the beginning of each month at 6% interest to accumulate the sum of $4,800 in five years. He should use a table for the:

First Financial Auto Loan Department wishes to know the payment required at the first of each month on a $10,500, 48-month, 11% auto loan. To determine this amount, First Financial would:

Environment and Theoretical Structure of Financial Accounting

Review of the Accounting Process

The Balance Sheet and Financial Disclosures

The Income Statement, Comprehensive Income, and the Statement of Cash Flows

Revenue Recognition

Cash and Receivables

Inventories: Measurement

Inventories: Additional Issues

Property, Plant, and Equipment and Intangible Assets: Acquisition

Property, Plant, and Equipment and Intangible Assets: Utilization and Disposition

Investments

Current Liabilities and Contingencies

Bonds and Long-Term Notes

Leases

Accounting for Income Taxes

Pensions and Other Postretirement Benefits

Shareholders Equity

Share-Based Compensation and Earnings Per Share

Accounting Changes and Error Corrections

The Statement of Cash Flows Revisited

Filters

Exam 6: Time Value of Money Concepts

Explain how you would compute the imputed interest on cash borrowed at 0% interest when the market rate of interest is 8%.

An investor purchases a 20-year, $1,000 par value bond that pays semiannual interest of $40. If the semiannual market rate of interest is 5%, what is the current market value of the bond? (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1)

Below are excerpts from time value of money tables for the 8% rate. -Column 5 is an interest table for the:

George Jones is planning on a cruise for his 70th birthday party. He wants to know how much he should set aside at the beginning of each month at 6% interest to accumulate the sum of $4,800 in five years. He should use a table for the:

First Financial Auto Loan Department wishes to know the payment required at the first of each month on a $10,500, 48-month, 11% auto loan. To determine this amount, First Financial would:

Environment and Theoretical Structure of Financial Accounting

Review of the Accounting Process

The Balance Sheet and Financial Disclosures

The Income Statement, Comprehensive Income, and the Statement of Cash Flows

Revenue Recognition

Cash and Receivables

Inventories: Measurement

Inventories: Additional Issues

Property, Plant, and Equipment and Intangible Assets: Acquisition

Property, Plant, and Equipment and Intangible Assets: Utilization and Disposition

Investments

Current Liabilities and Contingencies

Bonds and Long-Term Notes

Leases

Accounting for Income Taxes

Pensions and Other Postretirement Benefits

Shareholders Equity

Share-Based Compensation and Earnings Per Share

Accounting Changes and Error Corrections

The Statement of Cash Flows Revisited

Filters

George Jones is planning on a cruise for his 70^th birthday party. He wants to know how much he should set aside at the beginning of each month at 6% interest to accumulate the sum of $4,800 in five years. He should use a table for the: