Question 1

It will take approximately 18.8 years for a $100 deposit to result in a future value of $600 if I can earn 10% on my deposit.

Accepted Answer

A) True 
 B)False  True

Question 2

Anders owns stock in a company which has consistently paid a growing dividend over the last 10 years.The first year Alexis owned the stock,he received $4.50 per share and in the 10th year,he received $4.92 per share.What is the growth rate of the dividends over the last 10 years?

Accepted Answer

A) 8% 
B) 4% 
C) 2% 
D) 1% 
A) 8% 
B) 4% 
C) 2% 
D) 1% D

Question 3

An annuity due may also be referred to as a deferred annuity.

Accepted Answer

A) True 
 B)False  False

Question 4

The future value of a $100 annuity deposited for 10 years at 10% is $1,593.74.

Accepted Answer

A) True 
 B)False

Question 5

The present value of an annuity of $5,000 to be received at the end of each of the next six months for 6 years at a 4% annual rate would be:

Accepted Answer

A) $26,210 
B) $52,875 
C) $3,950 
D) none of the above 
A) $26,210 
B) $52,875 
C) $3,950 
D) none of the above

Question 6

If you have an account with a 21.5% annual percentage rate where interest is compounded quarterly,what is the effective annual rate of interest?

Accepted Answer

A) 23.75% 
B) 23.3% 
C) 21.5% 
D) none of the above 
A) 23.75% 
B) 23.3% 
C) 21.5% 
D) none of the above

Question 7

If the present-value interest factor for i percent and n periods is 0.270,the future-value interest factor for the same i and n is

Accepted Answer

A) 0.730. 
B) 3.797. 
C) 3.704. 
D) cannot be determined. 
A) 0.730. 
B) 3.797. 
C) 3.704. 
D) cannot be determined.

Question 8

A potential investment pays $10 per year indefinitely.The appropriate discount rate for the potential investor is 10%.The present value of this cash flow is calculated by:

Accepted Answer

A) multiplying $10 by the appropriate present value factor 
B) dividing $10 by 10 
C) multiplying $10 by the present value factor of an annuity 
D) dividing $10 by .10 
A) multiplying $10 by the appropriate present value factor 
B) dividing $10 by 10 
C) multiplying $10 by the present value factor of an annuity 
D) dividing $10 by .10

Question 9

Tracey deposits $5,000 in a five-year certificate of deposit paying 6% compounded semi-annually.How much will Tracey have at the end of the five-year period?

Accepted Answer

A) $6,720 
B) $6,690 
C) $6,596 
D) $6,910 
A) $6,720 
B) $6,690 
C) $6,596 
D) $6,910

Question 10

For a given discount rate,an ordinary annuity and an annuity due have the same present value.

Accepted Answer

A) True 
 B)False

Question 11

The future value of $2,000 invested at 6% in 3 years would result in a value of:

Accepted Answer

A) $2,000 
B) $2,382 
C) $6,362 
D) none of the above 
A) $2,000 
B) $2,382 
C) $6,362 
D) none of the above

Question 12

In actual practice,most corporate bonds pay interest four times a year.

Accepted Answer

A) True 
 B)False

Question 13

In 1976,the average price of a domestic car was $5,100.Twenty years later,in 1996,the average price was $16,600.What was the annual growth rate in the car price over the 20-year period?

Accepted Answer

A) 5% 
B) 6% 
C) 7% 
D) 8% 
A) 5% 
B) 6% 
C) 7% 
D) 8%

Question 14

It will take approximately 9.6 years for a $100 deposit to result in a future value of $600 if I can earn 10% on my deposit.

Accepted Answer

A) True 
 B)False

Question 15

The future value of a $100 annuity deposited for 10 years at 10% is $614.46.

Accepted Answer

A) True 
 B)False

Question 16

A generous benefactor to the local university plans to make a one-time endowment which would provide the university with $150,000 per year into perpetuity.The rate of interest is expected to be 5 percent for all future time periods.How large must the endowment be?

Accepted Answer

A) $300,000 
B) $3,000,000. 
C) $750,000. 
D) $1,428,571. 
A) $300,000 
B) $3,000,000. 
C) $750,000. 
D) $1,428,571.

Question 17

Tom Vu deposited $5,000 in a savings account that paid 8% interest compounded quarterly.What is the effective rate of interest?

Accepted Answer

A) 8.00% 
B) 8.24% 
C) 8.33% 
D) 8.46% 
A) 8.00% 
B) 8.24% 
C) 8.33% 
D) 8.46%

Question 18

Level cash flow amounts that occur at the end of each period,beginning at the end of the first period,form an annuity due.

Accepted Answer

A) True 
 B)False

Question 19

The effective annual rate (EAR)is the true opportunity cost measure of the interest rate.

Accepted Answer

A) True 
 B)False

Question 20

Joe Biden plans to fund his individual retirement account (IRA)with the maximum contribution of $2,500 at the end of each year for the next 30 years.If Joe can earn 10 percent on his contributions,how much will he have at the end of the tenth year?

Accepted Answer

A) $411,235 
B) -$411,235. 
C) $23,567. 
D) -$23,567. 
A) $411,235 
B) -$411,235. 
C) $23,567. 
D) -$23,567.

It will take approximately 18.8 years for a $100 deposit to result in a future value of $600 if I can earn 10% on my deposit.

Anders owns stock in a company which has consistently paid a growing dividend over the last 10 years.The first year Alexis owned the stock,he received $4.50 per share and in the 10th year,he received $4.92 per share.What is the growth rate of the dividends over the last 10 years?

An annuity due may also be referred to as a deferred annuity.

The future value of a $100 annuity deposited for 10 years at 10% is $1,593.74.

The present value of an annuity of $5,000 to be received at the end of each of the next six months for 6 years at a 4% annual rate would be:

If you have an account with a 21.5% annual percentage rate where interest is compounded quarterly,what is the effective annual rate of interest?

If the present-value interest factor for i percent and n periods is 0.270,the future-value interest factor for the same i and n is

A potential investment pays $10 per year indefinitely.The appropriate discount rate for the potential investor is 10%.The present value of this cash flow is calculated by:

Tracey deposits $5,000 in a five-year certificate of deposit paying 6% compounded semi-annually.How much will Tracey have at the end of the five-year period?

For a given discount rate,an ordinary annuity and an annuity due have the same present value.

The future value of $2,000 invested at 6% in 3 years would result in a value of:

In actual practice,most corporate bonds pay interest four times a year.

In 1976,the average price of a domestic car was $5,100.Twenty years later,in 1996,the average price was $16,600.What was the annual growth rate in the car price over the 20-year period?

It will take approximately 9.6 years for a $100 deposit to result in a future value of $600 if I can earn 10% on my deposit.

The future value of a $100 annuity deposited for 10 years at 10% is $614.46.

A generous benefactor to the local university plans to make a one-time endowment which would provide the university with $150,000 per year into perpetuity.The rate of interest is expected to be 5 percent for all future time periods.How large must the endowment be?

Tom Vu deposited $5,000 in a savings account that paid 8% interest compounded quarterly.What is the effective rate of interest?

Level cash flow amounts that occur at the end of each period,beginning at the end of the first period,form an annuity due.

The effective annual rate (EAR)is the true opportunity cost measure of the interest rate.

Joe Biden plans to fund his individual retirement account (IRA)with the maximum contribution of $2,500 at the end of each year for the next 30 years.If Joe can earn 10 percent on his contributions,how much will he have at the end of the tenth year?

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Exam 9: Time Value of Money

It will take approximately 18.8 years for a $100 deposit to result in a future value of $600 if I can earn 10% on my deposit.

Anders owns stock in a company which has consistently paid a growing dividend over the last 10 years.The first year Alexis owned the stock,he received $4.50 per share and in the 10th year,he received $4.92 per share.What is the growth rate of the dividends over the last 10 years?

An annuity due may also be referred to as a deferred annuity.

The future value of a $100 annuity deposited for 10 years at 10% is $1,593.74.

The present value of an annuity of $5,000 to be received at the end of each of the next six months for 6 years at a 4% annual rate would be:

If you have an account with a 21.5% annual percentage rate where interest is compounded quarterly,what is the effective annual rate of interest?

If the present-value interest factor for i percent and n periods is 0.270,the future-value interest factor for the same i and n is

A potential investment pays $10 per year indefinitely.The appropriate discount rate for the potential investor is 10%.The present value of this cash flow is calculated by:

Tracey deposits $5,000 in a five-year certificate of deposit paying 6% compounded semi-annually.How much will Tracey have at the end of the five-year period?

For a given discount rate,an ordinary annuity and an annuity due have the same present value.

The future value of $2,000 invested at 6% in 3 years would result in a value of:

In actual practice,most corporate bonds pay interest four times a year.

In 1976,the average price of a domestic car was $5,100.Twenty years later,in 1996,the average price was $16,600.What was the annual growth rate in the car price over the 20-year period?

It will take approximately 9.6 years for a $100 deposit to result in a future value of $600 if I can earn 10% on my deposit.

The future value of a $100 annuity deposited for 10 years at 10% is $614.46.

A generous benefactor to the local university plans to make a one-time endowment which would provide the university with $150,000 per year into perpetuity.The rate of interest is expected to be 5 percent for all future time periods.How large must the endowment be?

Tom Vu deposited $5,000 in a savings account that paid 8% interest compounded quarterly.What is the effective rate of interest?

Level cash flow amounts that occur at the end of each period,beginning at the end of the first period,form an annuity due.

The effective annual rate (EAR)is the true opportunity cost measure of the interest rate.

Joe Biden plans to fund his individual retirement account (IRA)with the maximum contribution of $2,500 at the end of each year for the next 30 years.If Joe can earn 10 percent on his contributions,how much will he have at the end of the tenth year?

The Financial Environment

Money and the Monetary System

Banks and Other Financial Institutions

Federal Reserve System

Policy Makers and the Money Supply

International Finance and Trade

Savings and Investment Process

Interest Rates

Bonds and Stocks: Characteristics and Valuation

Securities Markets

Financial Return and Risk Concepts

Business Organization and Financial Data

Financial Analysis and Long-Term Financial Planning

Managing Working Capital

Short-Term Business Financing

Capital Budgeting Analysis

Capital Structure and the Cost of Capital

Filters