Question 1

Why does the future value of an amount increase when interest is compounded semiannually instead of annually?

Accepted Answer

Future value increases if inte

Question 2

You have just purchased a new Corvette Convertible for $52,000.You have paid $5,000 down and have financed the rest.The financing arrangement calls for you to make monthly payments for the next 5 years at an 8% interest rate.What will be the amount of your payment?

Accepted Answer

Present value of ann

Question 3

Art Burtscher has a choice of investing $10,000 at either 5% simple interest or 5% compound interest that is compounded annually.What will be the difference between
The total amount of interest earned after two years?

Accepted Answer

A) No difference 
B) $25 
C) $50 
D) $100 
A) No difference 
B) $25 
C) $50 
D) $100

Question 4

The future value of a $4,800 investment at the end of 4 years with an interest rate of 10% compounded semiannually is:

Accepted Answer

A) $7,092.00 
B) $6,720.00 
C) $7,027.68 
D) $3,248.64 
A) $7,092.00 
B) $6,720.00 
C) $7,027.68 
D) $3,248.64

Question 5

If $10,000 was invested 6 years ago and has now grown to $15,007,the rate of interest earned,assuming the interest rate was compounded annually,was:

Accepted Answer

A) 8.3% 
B) 2.5% 
C) 7.0% 
D) cannot be determined from the information given 
A) 8.3% 
B) 2.5% 
C) 7.0% 
D) cannot be determined from the information given

Question 6

Chuck Purinton wants to receive $120,000 a year when he retires at age 65 and expects to live until 85.He believes he can earn 7%.How much must he have saved to achieve this goal and what age must he have this money saved?

Accepted Answer

Present value of annuity
PV =

Question 7

Assuming an 8% interest rate,the dollar amount available on June 1,2016,resulting from 7 annual deposits of $3,500 each with the first deposit made on June 1,2010,is:

Accepted Answer

A) $18,222.40 
B) $31,229.81 
C) $41,988.10 
D) $30,498.30 
A) $18,222.40 
B) $31,229.81 
C) $41,988.10 
D) $30,498.30

Question 8

Sphinx Enterprises is contemplating investing in a copper mine.An investment of $750,000 would be made for one year with the following potential outcomes:   The expected rate of return for this investment is:

Accepted Answer

A) 22.0% 
B) 15.5% 
C) 62.0% 
D) 8.3% 
A) 22.0% 
B) 15.5% 
C) 62.0% 
D) 8.3%

Question 9

The present value of $13,000 received seven years from today,assuming an interest rate of 5% compounded annually is:

Accepted Answer

A) $ 9,269.00 
B) $18,292.30 
C) $17,550.00 
D) $ 9,238.85 
A) $ 9,269.00 
B) $18,292.30 
C) $17,550.00 
D) $ 9,238.85

Question 10

Badger Corp is trying to decide whether to buy a new machine with a price of $40,000.Their analysis indicates the machine will generate annual cash flows of $11,000 for each of the next 6 years.The rate of return expected of any investment Badger make is 9%.Should Badger purchase the machine?

Accepted Answer

Present value of an annuity
ANN = $11,00

Question 11

You have $3,000 and are going to put it into a savings account.How much will you have in 10 years if you can earn:
(A.)7% compounded semi-annually?
(B.)10% compounded monthly?

Accepted Answer

Future value of amount of $1
(

Question 12

Gina's Fashion plans to make semiannual deposits of $1,963.64 until she has accumulated $72,000.Assuming she earns 7% on her investment,Wagner will need to make a total of:

Accepted Answer

A) 12 payments 
B) 36 payments 
C) 24 payments 
D) cannot be determined from the information given 
A) 12 payments 
B) 36 payments 
C) 24 payments 
D) cannot be determined from the information given

Question 13

Marcus Perry wants to retire at age 60 with $1,500,000.He is 23 years old today and says
that on his 25th birthday he will start making annual payments into a fund that will
generate 7% interest.How much must Marcus put into the fund annually to achieve his
goal?

Accepted Answer

Calculator only
Present Value

Question 14

The present value of a future cash receipt

Accepted Answer

A) decreases as the interest rate goes down 
B) decreases as the time till receipt goes up 
C) increases as the time till receipt goes up 
D) increases as the interest rate goes up 
A) decreases as the interest rate goes down 
B) decreases as the time till receipt goes up 
C) increases as the time till receipt goes up 
D) increases as the interest rate goes up

Question 15

John Stamos will have $1,000,000 in his investment account on the day he retires.
Stamos would like to be able to make a series of equal quarterly withdrawals from the
account for 20 years beginning 3 months after he retires.Assuming the investment
account will earn 10% determine the amount of each quarterly withdrawal.

Accepted Answer

Present value of ann

Question 16

Interest calculated only on the amount borrowed is referred to as:

Accepted Answer

A) compound interest 
B) risk-free interest 
C) inflation interest 
D) simple interest 
A) compound interest 
B) risk-free interest 
C) inflation interest 
D) simple interest

Question 17

Mary Fagan invested $6,500 in a bank account that pays interest at the rate of 8% compounded annually.If Fagan makes no withdrawals,the account balance after 5 years will be:

Accepted Answer

A) $9,550.45 
B) $9,100.00 
C) $4,423.90 
D) $9,603.75 
A) $9,550.45 
B) $9,100.00 
C) $4,423.90 
D) $9,603.75

Question 18

Mary and Becky are 22-year-old recent college graduates.Both want to be able to retire at age 50.Mary makes $1,200 annual payments starting immediately.Becky waits ten years,then begins making $2,400 annual payments.Both earn 6% annually on their savings.Which one will have paid more money into her retirement fund when she reaches age 50? Which will have the highest balance in her retirement fund? Why?

Accepted Answer

Becky will have paid in $45,600 ($2,400

Question 19

Which of the following is NOT true about compound interest

Accepted Answer

A) As the number of compoundings increases the annual effective interest rate increases 
B) As the number of compoundings increases the incremental amount of interest
Increases 
C) As the number of compoundings increases the total amount of interest increases 
D) As the number of compoundings increases the interest rate remains the same 
A) As the number of compoundings increases the annual effective interest rate increases 
B) As the number of compoundings increases the incremental amount of interest
Increases 
C) As the number of compoundings increases the total amount of interest increases 
D) As the number of compoundings increases the interest rate remains the same

Question 20

Ople Brown made an investment on November 1,2009 which yielded $15,000 and a 10% return on November 1,2010.How much did Ople invest?
A)$150,000
B)$140,000
C)$160,000
D)$155,000

Accepted Answer

The answer of Ople Brown made an investment on November...

Why does the future value of an amount increase when interest is compounded semiannually instead of annually?

You have just purchased a new Corvette Convertible for $52,000.You have paid $5,000 down and have financed the rest.The financing arrangement calls for you to make monthly payments for the next 5 years at an 8% interest rate.What will be the amount of your payment?

Art Burtscher has a choice of investing $10,000 at either 5% simple interest or 5% compound interest that is compounded annually.What will be the difference between The total amount of interest earned after two years?

The future value of a $4,800 investment at the end of 4 years with an interest rate of 10% compounded semiannually is:

If $10,000 was invested 6 years ago and has now grown to $15,007,the rate of interest earned,assuming the interest rate was compounded annually,was:

Chuck Purinton wants to receive $120,000 a year when he retires at age 65 and expects to live until 85.He believes he can earn 7%.How much must he have saved to achieve this goal and what age must he have this money saved?

Assuming an 8% interest rate,the dollar amount available on June 1,2016,resulting from 7 annual deposits of $3,500 each with the first deposit made on June 1,2010,is:

Sphinx Enterprises is contemplating investing in a copper mine.An investment of $750,000 would be made for one year with the following potential outcomes: The expected rate of return for this investment is:

The present value of $13,000 received seven years from today,assuming an interest rate of 5% compounded annually is:

Badger Corp is trying to decide whether to buy a new machine with a price of $40,000.Their analysis indicates the machine will generate annual cash flows of $11,000 for each of the next 6 years.The rate of return expected of any investment Badger make is 9%.Should Badger purchase the machine?

You have $3,000 and are going to put it into a savings account.How much will you have in 10 years if you can earn: (A.)7% compounded semi-annually? (B.)10% compounded monthly?

Gina's Fashion plans to make semiannual deposits of $1,963.64 until she has accumulated $72,000.Assuming she earns 7% on her investment,Wagner will need to make a total of:

Marcus Perry wants to retire at age 60 with $1,500,000.He is 23 years old today and says that on his 25^th birthday he will start making annual payments into a fund that will generate 7% interest.How much must Marcus put into the fund annually to achieve his goal?

The present value of a future cash receipt

Interest calculated only on the amount borrowed is referred to as:

Mary Fagan invested $6,500 in a bank account that pays interest at the rate of 8% compounded annually.If Fagan makes no withdrawals,the account balance after 5 years will be:

Which of the following is NOT true about compound interest

Ople Brown made an investment on November 1,2009 which yielded $15,000 and a 10% return on November 1,2010.How much did Ople invest? A)$150,000 B)$140,000 C)$160,000 D)$155,000

Accounting and Business

Business Processes and Accounting Information

Operating Processes: Planning and Control

Short-Term Decision Making

Strategic Planning Regarding Operating Processes

Planning, The Balanced Scorecard, and Budgeting

Accounting Information Systems

Purchasinghuman Resourcespayment Process: Recording and Evaluating Expenditure Process Activities

Recording and Evaluating Conversion Process Activities

Recording and Evaluating Revenue Process Activities

Planning Investments: Capital Budgeting

Planning Equity Financing

Planning Debt Financing

Recording and Evaluating Capital Resource Process Activities: Financing

Recording and Evaluating Capital Resource Process Activities: Investing

Company Performance: Profitability

Company Performance: Owners Equity and Financial Position

Company Performance: Cash Flows

Company Performance: Comprehensive Evaluation

Filters

Exam 11: Time Value of Money

Why does the future value of an amount increase when interest is compounded semiannually instead of annually?

You have just purchased a new Corvette Convertible for $52,000.You have paid $5,000 down and have financed the rest.The financing arrangement calls for you to make monthly payments for the next 5 years at an 8% interest rate.What will be the amount of your payment?

Art Burtscher has a choice of investing $10,000 at either 5% simple interest or 5% compound interest that is compounded annually.What will be the difference between The total amount of interest earned after two years?

The future value of a $4,800 investment at the end of 4 years with an interest rate of 10% compounded semiannually is:

If $10,000 was invested 6 years ago and has now grown to $15,007,the rate of interest earned,assuming the interest rate was compounded annually,was:

Chuck Purinton wants to receive $120,000 a year when he retires at age 65 and expects to live until 85.He believes he can earn 7%.How much must he have saved to achieve this goal and what age must he have this money saved?

Assuming an 8% interest rate,the dollar amount available on June 1,2016,resulting from 7 annual deposits of $3,500 each with the first deposit made on June 1,2010,is:

Sphinx Enterprises is contemplating investing in a copper mine.An investment of $750,000 would be made for one year with the following potential outcomes: The expected rate of return for this investment is:

The present value of $13,000 received seven years from today,assuming an interest rate of 5% compounded annually is:

Badger Corp is trying to decide whether to buy a new machine with a price of $40,000.Their analysis indicates the machine will generate annual cash flows of $11,000 for each of the next 6 years.The rate of return expected of any investment Badger make is 9%.Should Badger purchase the machine?

You have $3,000 and are going to put it into a savings account.How much will you have in 10 years if you can earn: (A.)7% compounded semi-annually? (B.)10% compounded monthly?

Gina's Fashion plans to make semiannual deposits of $1,963.64 until she has accumulated $72,000.Assuming she earns 7% on her investment,Wagner will need to make a total of:

Marcus Perry wants to retire at age 60 with $1,500,000.He is 23 years old today and says that on his 25th birthday he will start making annual payments into a fund that will generate 7% interest.How much must Marcus put into the fund annually to achieve his goal?

The present value of a future cash receipt

Interest calculated only on the amount borrowed is referred to as:

Mary Fagan invested $6,500 in a bank account that pays interest at the rate of 8% compounded annually.If Fagan makes no withdrawals,the account balance after 5 years will be:

Which of the following is NOT true about compound interest

Ople Brown made an investment on November 1,2009 which yielded $15,000 and a 10% return on November 1,2010.How much did Ople invest? A)$150,000 B)$140,000 C)$160,000 D)$155,000

Accounting and Business

Business Processes and Accounting Information

Operating Processes: Planning and Control

Short-Term Decision Making

Strategic Planning Regarding Operating Processes

Planning, The Balanced Scorecard, and Budgeting

Accounting Information Systems

Purchasinghuman Resourcespayment Process: Recording and Evaluating Expenditure Process Activities

Recording and Evaluating Conversion Process Activities

Recording and Evaluating Revenue Process Activities

Planning Investments: Capital Budgeting

Planning Equity Financing

Planning Debt Financing

Recording and Evaluating Capital Resource Process Activities: Financing

Recording and Evaluating Capital Resource Process Activities: Investing

Company Performance: Profitability

Company Performance: Owners Equity and Financial Position

Company Performance: Cash Flows

Company Performance: Comprehensive Evaluation

Filters

Marcus Perry wants to retire at age 60 with $1,500,000.He is 23 years old today and says that on his 25^th birthday he will start making annual payments into a fund that will generate 7% interest.How much must Marcus put into the fund annually to achieve his goal?