Question 1

The more frequent the compounding, the higher the future value, other things being equal.

Accepted Answer

A) True 
 B)False

Question 2

What is the APR on a loan with an effective annual rate of 15.01 percent and weekly compounding of interest?

Accepted Answer

A) 12.00 percent 
B) 12.50 percent 
C) 13.00 percent 
D) 14.00 percent 1.1501 = 
A) 12.00 percent 
B) 12.50 percent 
C) 13.00 percent 
D) 14.00 percent 1.1501 =

Question 3

Anna wishes to have $800,000 in her retirement fund in 20 years.If she contributes $2,000 per month at the start of each month for 20 years, what must she deposit now to achieve this goal? Assume interest is 9.2% compounded semi-annually.

Accepted Answer

A) $91,127 
B) $101,656 
C) $102,443 
D) $103,982 
A) $91,127 
B) $101,656 
C) $102,443 
D) $103,982

Question 4

What problem can be caused by "mixing" real and nominal cash flows in discounting exercises?

Accepted Answer

One of the primary components of a nomin

Question 5

The present value of a perpetuity can be determined by:

Accepted Answer

A) Multiplying the payment by the interest rate 
B) Dividing the interest rate by the payment 
C) Multiplying the payment by the number of payments to be made 
D) Dividing the payment by the interest rate 
A) Multiplying the payment by the interest rate 
B) Dividing the interest rate by the payment 
C) Multiplying the payment by the number of payments to be made 
D) Dividing the payment by the interest rate

Question 6

Approximately how much must be saved for retirement in order to withdraw $100,000 per year for the next 25 years if the balance earns 8 percent annually, and the first payment occurs one year from now?

Accepted Answer

A) $1,067,000 
B) $1,250,000 
C) $2,315,000 
D) $2,500,000 PV = $100,000
= $100,000 x (12.5 -1.8252) 
A) $1,067,000 
B) $1,250,000 
C) $2,315,000 
D) $2,500,000 PV = $100,000
= $100,000 x (12.5 -1.8252)

Question 7

For a given amount, the lower the discount rate, the less the present value.

Accepted Answer

A) True 
 B)False

Question 8

$3,000 is deposited into an account paying 10 percent annually, to provide three annual withdrawals of $1,206.34 beginning in one year.How much remains in the account after the second payment has been withdrawn?

Accepted Answer

A) $1,326.97 
B) $1,206.34 
C) $1,096.67 
D) $587.32 
A) $1,326.97 
B) $1,206.34 
C) $1,096.67 
D) $587.32

Question 9

Considering the past economic history of Canada, high rates of price inflation are typically accompanied by:

Accepted Answer

A) Low nominal interest rates 
B) High nominal interest rates 
C) Negative nominal interest rates 
D) No correlation with nominal interest rates 
A) Low nominal interest rates 
B) High nominal interest rates 
C) Negative nominal interest rates 
D) No correlation with nominal interest rates

The more frequent the compounding, the higher the future value, other things being equal.

What is the APR on a loan with an effective annual rate of 15.01 percent and weekly compounding of interest?

Anna wishes to have $800,000 in her retirement fund in 20 years.If she contributes $2,000 per month at the start of each month for 20 years, what must she deposit now to achieve this goal? Assume interest is 9.2% compounded semi-annually.

What problem can be caused by "mixing" real and nominal cash flows in discounting exercises?

The present value of a perpetuity can be determined by:

Approximately how much must be saved for retirement in order to withdraw $100,000 per year for the next 25 years if the balance earns 8 percent annually, and the first payment occurs one year from now?

For a given amount, the lower the discount rate, the less the present value.

$3,000 is deposited into an account paying 10 percent annually, to provide three annual withdrawals of $1,206.34 beginning in one year.How much remains in the account after the second payment has been withdrawn?

Considering the past economic history of Canada, high rates of price inflation are typically accompanied by:

Goals and Governance of the Firm

Financial Markets and Institutions

Accounting and Finance

Measuring Corporate Performance

Valuing Bonds

Valuing Stocks

Net Present Value and Other Investment Criteria

Using Discounted Cash-Flow Analysis to Make Investment Decisions

Project Analysis

Introduction to Risk, Return, and the Opportunity Cost of Capital

Risk, Return, and Capital Budgeting

The Weighted-Average Cost of Capital and Company Valuation

Introduction to Corporate Financing and Governance

Venture Capital, Ipos, and Seasoned Offerings

Debt Policy

Payout Policy

Long-Term Financial Planning

Short-Term Financial Planning

Working Capital Management

Mergers, Acquisitions, and Corporate Control

International Financial Management

Options

Risk Management

Conclusion

What We Do and Do Not Know About Finance

Filters

Exam 5: The Time Value of Money

The more frequent the compounding, the higher the future value, other things being equal.

What is the APR on a loan with an effective annual rate of 15.01 percent and weekly compounding of interest?

Anna wishes to have $800,000 in her retirement fund in 20 years.If she contributes $2,000 per month at the start of each month for 20 years, what must she deposit now to achieve this goal? Assume interest is 9.2% compounded semi-annually.

What problem can be caused by "mixing" real and nominal cash flows in discounting exercises?

The present value of a perpetuity can be determined by:

Approximately how much must be saved for retirement in order to withdraw $100,000 per year for the next 25 years if the balance earns 8 percent annually, and the first payment occurs one year from now?

For a given amount, the lower the discount rate, the less the present value.

$3,000 is deposited into an account paying 10 percent annually, to provide three annual withdrawals of $1,206.34 beginning in one year.How much remains in the account after the second payment has been withdrawn?

Considering the past economic history of Canada, high rates of price inflation are typically accompanied by:

Goals and Governance of the Firm

Financial Markets and Institutions

Accounting and Finance

Measuring Corporate Performance

Valuing Bonds

Valuing Stocks

Net Present Value and Other Investment Criteria

Using Discounted Cash-Flow Analysis to Make Investment Decisions

Project Analysis

Introduction to Risk, Return, and the Opportunity Cost of Capital

Risk, Return, and Capital Budgeting

The Weighted-Average Cost of Capital and Company Valuation

Introduction to Corporate Financing and Governance

Venture Capital, Ipos, and Seasoned Offerings

Debt Policy

Payout Policy

Long-Term Financial Planning

Short-Term Financial Planning

Working Capital Management

Mergers, Acquisitions, and Corporate Control

International Financial Management

Options

Risk Management

Conclusion

What We Do and Do Not Know About Finance

Filters