Question 1

The last interest payment on a 12-year, 6%, $138,000, fully-amortized loan with annual payments will be less than the first interest payment.

Accepted Answer

A) True 
 B)False

Question 2

Derek and his father have an agreement. If Derek can save $15,000, his father will pay the balance toward a used car (up to a total of $20,000). If Derek can save $3,800 per year, how long will it take him to reach $15,000 if he invests the money into an account earning an annual rate of 4.25%? Use a financial calculator.

Accepted Answer

The answer of Derek and his father have an agreement....

Question 3

Given positive equal annual cash flows and a positive interest rate, the present value of an annuity will be greater than the sum of the cash flows.

Accepted Answer

A) True 
 B)False

Question 4

Your need to repay a loan with a future value of $304,071.00 in 18.5 years. If you can make annual year-end deposits of $11,000 into an account, what annual rate of return would you require to earn enough money to pay the loan in full at the due date?

Accepted Answer

A)  7.92% 
B)  8.73% 
C)  4.16% 
D)  4.39% 
A)  7.92% 
B)  8.73% 
C)  4.16% 
D)  4.39%

The last interest payment on a 12-year, 6%, $138,000, fully-amortized loan with annual payments will be less than the first interest payment.

Given positive equal annual cash flows and a positive interest rate, the present value of an annuity will be greater than the sum of the cash flows.

Your need to repay a loan with a future value of $304,071.00 in 18.5 years. If you can make annual year-end deposits of $11,000 into an account, what annual rate of return would you require to earn enough money to pay the loan in full at the due date?

Financial Management

Financial Statements

The Time Value of Money Part 1

Interest Rates

Bonds and Bond Valuation

Stocks and Stock Valuation

Risk and Return

Capital Budgeting Decision Models

Cash Flow Estimation

The Cost of Capital

Forecasting and Short-Term Financial Planning

Working Capital Management

Financial Ratios and Firm Performance

Raising Capital

Capital Structure

Dividends, Dividend Policy, and Stock Splits

International Financial Management

Filters

Exam 4: The Time Value of Money Part 2

The last interest payment on a 12-year, 6%, $138,000, fully-amortized loan with annual payments will be less than the first interest payment.

Given positive equal annual cash flows and a positive interest rate, the present value of an annuity will be greater than the sum of the cash flows.

Your need to repay a loan with a future value of $304,071.00 in 18.5 years. If you can make annual year-end deposits of $11,000 into an account, what annual rate of return would you require to earn enough money to pay the loan in full at the due date?

Financial Management

Financial Statements

The Time Value of Money Part 1

Interest Rates

Bonds and Bond Valuation

Stocks and Stock Valuation

Risk and Return

Capital Budgeting Decision Models

Cash Flow Estimation

The Cost of Capital

Forecasting and Short-Term Financial Planning

Working Capital Management

Financial Ratios and Firm Performance

Raising Capital

Capital Structure

Dividends, Dividend Policy, and Stock Splits

International Financial Management

Filters