Exam 11: Time Value of Money

You want to have $50,000 in a savings account 8 years from today and you are going to make payments every month to achieve this goal.To determine the amount of monthly payments you have to make starting today you will need to use which of the following?

Acme Company wants to have $1,200,000 twenty years from today.How much must it put in the bank today to achieve this goal if it can earn 8 percent that is compounded monthly?

The future value of an $11,600 investment at the end of 5 years with an interest rate of 12% compounded quarterly is:

Calculate the expected rate of return for an investment of $550,000.What does the expected rate of return mean?

Ishvar Patel is going to make 5 annual deposits of $4,500 each into a savings account beginning on July 1,2010.Assuming an interest rate of 6%,on July 1,2014,Ishvar's bank account will have a balance of:

Lisa Corsetti would like to have $50,000 in 10 years time to pay for her daughters' college education.The amount that Corsetti would have to invest today,assuming an interest rate of 6% compounded semiannually,in order to reach her goal is:

When calculating the present or future value of an annuity we assume:

Joe Bittner has just passed his CPA exam and has a great job with a Big 4 CPA firm and has decided to buy a new BMW.If the price of the car is $36,000 how much will his monthly payments be if he make payments over the next 4 years if he can get a 6% interest rate?

Heather Whitestone wants to retire at the age of 65.She is 45 years old today and will start making semiannual deposits into an investment account in 6 months.Heather would like to have $1,000,000 on her 65th birthday.Assuming Whitestone can earn 8% interest compounded semiannually on her investments; determine the required amount of each semiannual deposit.

The difference between the present and future value of an amount is

Alfred Bester wants to know how much he should have in retirement saving when he retires if he wants to withdraw $40,000 per year.What type of problem is this?

In compound interest calculations,as the frequency of compounding decreases,the:

You are trying to decide whether to buy a machine today.The machine will generate $12,000 cash at the end of each of the next 5 years.If you must have a 10% rate of return on your investments,what is the most you would pay for this machine?

Susan Ivanova has just accepted a position as a test pilot for Babylon Industries.Her starting salary is $80,000 and she has been promised raises of at least five percent each year.What will Ivanova's salary be in ten years?

On January 1,2008,BP Company purchased equipment on a three-year note.To determine the amount at which to record the machine,the three annual year-end payments must be calculated by using.

Explain the difference between "return of investment" and "return on investment".In judging the success of an investment,is the dollar amount of the return the only factor considered? If not,what additional information is necessary to properly evaluate an investment? What available measure of the performance of investments helps eliminate the distortion caused by the relative size of an initial investment?

Given a 10% interest rate compounded semiannually,the dollar amount available on September 1,2015,assuming 12 semiannual deposits of $2,000 each with the first deposit made on March 1,2010,is:

Adam Gross invested $2,500 on July 1,2009,and in return he received a total of $2,850,which he collected on July 1,2010.The rate of return on Adam's investment was:

How much would you loan someone today,January 1,2010,if they promised to pay you $10,000 on January 1,2012 and $20,000 on January 1,2015 and you want a 9 percent return on your investment that is compounded annually?

Which of the following should be used to compute the monthly payments on a home loan?