Question 1

George Bush makes annual end-of-year payments of $5,043.71 on a four-year loan with an interest rate of 13 percent.The original principal amount was

Accepted Answer

A) $24,462 
B) $15,000 
C) $3,092 
D) $20,175 
A) $24,462 
B) $15,000 
C) $3,092 
D) $20,175

Question 2

If the stated or nominal interest rate is 10 percent and the inflation rate is 5 percent,the differential compounding rate would be ________ percent

Accepted Answer

A) ten 
B) five 
C) two 
D) fifteen 
A) ten 
B) five 
C) two 
D) fifteen

Question 3

If $1,000 were invested now at a 12% interest rate compounded annually,what would be the value of the investment in two years?

Accepted Answer

A) $1,254 
B) $1,210 
C) $1,188 
D) $1,160 
A) $1,254 
B) $1,210 
C) $1,188 
D) $1,160

Question 4

If the interest rate is zero,the future value interest factor equals ________.

Accepted Answer

A) -1.0 
B) 0.0 
C) 1.0 
D) 2.0 
A) -1.0 
B) 0.0 
C) 1.0 
D) 2.0

Question 5

For a given interest rate,as the length of time until receipt of the funds increases,the present value interest factor

Accepted Answer

A) changes proportionally. 
B) increases. 
C) decreases. 
D) remains unchanged. 
A) changes proportionally. 
B) increases. 
C) decreases. 
D) remains unchanged.

Question 6

The time value concept/calculation used in amortizing a loan is

Accepted Answer

A) future value of a dollar 
B) future value of an annuity 
C) present value of a dollar 
D) present value of an annuity 
A) future value of a dollar 
B) future value of an annuity 
C) present value of a dollar 
D) present value of an annuity

Question 7

The present value of a $20,000 perpetuity at a 7 percent discount rate is

Accepted Answer

A) $186,915. 
B) $285,714. 
C) $140,000. 
D) $325,000. 
A) $186,915. 
B) $285,714. 
C) $140,000. 
D) $325,000.

Question 8

The return provided by a $100 annuity deposited for 10 years that results in a
future value of $1,593.74 is 10%.

Accepted Answer

A) True 
 B)False

Question 9

Assume a lender offers you a $25,000,10%,three-year loan that is to be fully amortized with three annual payments.The first payment will be due one year from the loan date.How much will you have to pay each year?

Accepted Answer

A) $8,042 
B) $9,026 
C) $10,053 
D) $11,120 
A) $8,042 
B) $9,026 
C) $10,053 
D) $11,120

Question 10

The return provided by a $100 annuity deposited for 10 years that results in a future value of $614.46 is 11.45%.

Accepted Answer

A) True 
 B)False

Question 11

The _________ value of a savings or investment is its amount or value at the present time.

Accepted Answer

A) present 
B) future 
C) book 
D) none of the above 
A) present 
B) future 
C) book 
D) none of the above

Question 12

Discounting means that interest earned each year,plus the principal,will be reinvested at the stated rate.

Accepted Answer

A) True 
 B)False

Question 13

At very low interest rates,the "Rule of 72" does not approximate the compounding process well.

Accepted Answer

A) True 
 B)False

Question 14

Bruce Lee wishes to accumulate $1 million by making equal annual end-of-year deposits over the next 20 years.If Bruce can earn 10 percent on his investments,how much must he deposit at the end of each year?

Accepted Answer

A) $14,900 
B) $50,000 
C) $117,453 
D) $17,460 
A) $14,900 
B) $50,000 
C) $117,453 
D) $17,460

Question 15

The return provided by a $100 annuity deposited for 10 years that results in a future value of $1,593.74 is 15%.

Accepted Answer

A) True 
 B)False

Question 16

The interest rate that measures the true interest rate when compounding occurs more frequently than once a year is called the:

Accepted Answer

A) annual percentage rate 
B) compound rate of interest 
C) stated rate of interest 
D) effective annual rate 
A) annual percentage rate 
B) compound rate of interest 
C) stated rate of interest 
D) effective annual rate

Question 17

The present value of an ordinary annuity of $350 each year for five years,assuming an opportunity cost of 4 percent,is

Accepted Answer

A) $288 
B) $1,896. 
C) $1,750. 
D) $1,558. 
A) $288 
B) $1,896. 
C) $1,750. 
D) $1,558.

Question 18

The present value of a $100 deposit in 10 years at 10% is $259.37.

Accepted Answer

A) True 
 B)False

Question 19

Angelina has planned to start her college education four years from now.To pay for her college education,she has decided to save $1,000 each quarter for the next four years in a bank account paying 12 percent interest.How much will she have at the end of the fourth year?

Accepted Answer

A) $1,574 
B) $19,116 
C) $20,157 
D) $16,000 
A) $1,574 
B) $19,116 
C) $20,157 
D) $16,000

Question 20

Money has a time value so long as interest is earned by saving or investing money.

Accepted Answer

A) True 
 B)False

George Bush makes annual end-of-year payments of $5,043.71 on a four-year loan with an interest rate of 13 percent.The original principal amount was

If the stated or nominal interest rate is 10 percent and the inflation rate is 5 percent,the differential compounding rate would be ________ percent

If $1,000 were invested now at a 12% interest rate compounded annually,what would be the value of the investment in two years?

If the interest rate is zero,the future value interest factor equals ________.

For a given interest rate,as the length of time until receipt of the funds increases,the present value interest factor

The time value concept/calculation used in amortizing a loan is

The present value of a $20,000 perpetuity at a 7 percent discount rate is

The return provided by a $100 annuity deposited for 10 years that results in a future value of $1,593.74 is 10%.

Assume a lender offers you a $25,000,10%,three-year loan that is to be fully amortized with three annual payments.The first payment will be due one year from the loan date.How much will you have to pay each year?

The return provided by a $100 annuity deposited for 10 years that results in a future value of $614.46 is 11.45%.

The _________ value of a savings or investment is its amount or value at the present time.

Discounting means that interest earned each year,plus the principal,will be reinvested at the stated rate.

At very low interest rates,the "Rule of 72" does not approximate the compounding process well.

Bruce Lee wishes to accumulate $1 million by making equal annual end-of-year deposits over the next 20 years.If Bruce can earn 10 percent on his investments,how much must he deposit at the end of each year?

The return provided by a $100 annuity deposited for 10 years that results in a future value of $1,593.74 is 15%.

The interest rate that measures the true interest rate when compounding occurs more frequently than once a year is called the:

The present value of an ordinary annuity of $350 each year for five years,assuming an opportunity cost of 4 percent,is

The present value of a $100 deposit in 10 years at 10% is $259.37.

Angelina has planned to start her college education four years from now.To pay for her college education,she has decided to save $1,000 each quarter for the next four years in a bank account paying 12 percent interest.How much will she have at the end of the fourth year?

Money has a time value so long as interest is earned by saving or investing money.

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

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Exam 9: Time Value of Money

George Bush makes annual end-of-year payments of $5,043.71 on a four-year loan with an interest rate of 13 percent.The original principal amount was

If the stated or nominal interest rate is 10 percent and the inflation rate is 5 percent,the differential compounding rate would be ________ percent

If $1,000 were invested now at a 12% interest rate compounded annually,what would be the value of the investment in two years?

If the interest rate is zero,the future value interest factor equals ________.

For a given interest rate,as the length of time until receipt of the funds increases,the present value interest factor

The time value concept/calculation used in amortizing a loan is

The present value of a $20,000 perpetuity at a 7 percent discount rate is

The return provided by a $100 annuity deposited for 10 years that results in a future value of $1,593.74 is 10%.

Assume a lender offers you a $25,000,10%,three-year loan that is to be fully amortized with three annual payments.The first payment will be due one year from the loan date.How much will you have to pay each year?

The return provided by a $100 annuity deposited for 10 years that results in a future value of $614.46 is 11.45%.

The _________ value of a savings or investment is its amount or value at the present time.

Discounting means that interest earned each year,plus the principal,will be reinvested at the stated rate.

At very low interest rates,the "Rule of 72" does not approximate the compounding process well.

Bruce Lee wishes to accumulate $1 million by making equal annual end-of-year deposits over the next 20 years.If Bruce can earn 10 percent on his investments,how much must he deposit at the end of each year?

The return provided by a $100 annuity deposited for 10 years that results in a future value of $1,593.74 is 15%.

The interest rate that measures the true interest rate when compounding occurs more frequently than once a year is called the:

The present value of an ordinary annuity of $350 each year for five years,assuming an opportunity cost of 4 percent,is

The present value of a $100 deposit in 10 years at 10% is $259.37.

Angelina has planned to start her college education four years from now.To pay for her college education,she has decided to save $1,000 each quarter for the next four years in a bank account paying 12 percent interest.How much will she have at the end of the fourth year?

Money has a time value so long as interest is earned by saving or investing money.

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

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