Question 1

How long will it take $3,000 to reach $5,000 when it grows at 7 percent per year?

Accepted Answer

A)  7.00 years 
B)  7.55 years 
C)  9.52 years 
D)  10.29 years 
A)  7.00 years 
B)  7.55 years 
C)  9.52 years 
D)  10.29 years

Question 2

The Rule of four is a simple mathematical approximation for

Accepted Answer

A)  the present value required to double an investment. 
B)  the future value required to double an investment. 
C)  the payments required to double an investment. 
D)  the number of years required to double an investment. 
A)  the present value required to double an investment. 
B)  the future value required to double an investment. 
C)  the payments required to double an investment. 
D)  the number of years required to double an investment.

Question 3

You deposit $200 in an account that doubles in 10 years. How many years will it take the account to be reduced to its original value if it loses 25 percent per year?

Accepted Answer

A)  2.00 years 
B)  2.41 years 
C)  3.11 years 
D)  4.00 years 
A)  2.00 years 
B)  2.41 years 
C)  3.11 years 
D)  4.00 years

Question 4

Your firm receives an offer from the supplier who provides computer chips used to manufacture cell phones. Due to poor planning, the supplier has an excess amount of chips and is willing to sell $600,000 worth of chips for only $500,000. You already have two years' supply on hand. It would cost you $7,500 today to store the chips until your firm needs them in two years. What implied interest rate would you be earning if you purchased and store the chips?

Accepted Answer

A)  6.57 percent 
B)  8.73 percent 
C)  9.54 percent 
D)  18.23 percent 
A)  6.57 percent 
B)  8.73 percent 
C)  9.54 percent 
D)  18.23 percent

Question 5

How many years will it take $200 to grow to $250 with an annual interest rate of 4 percent?

Accepted Answer

A)  1.24 years 
B)  5.69 years 
C)  6.25 years 
D)  18.00 years 
A)  1.24 years 
B)  5.69 years 
C)  6.25 years 
D)  18.00 years

Question 6

What annual rate of return is implied on a $1,000 loan taken next year when $1,500 must be repaid in year 5?

Accepted Answer

A)  8.45 percent 
B)  10.00 percent 
C)  10.67 percent 
D)  12.50 percent 
A)  8.45 percent 
B)  10.00 percent 
C)  10.67 percent 
D)  12.50 percent

Question 7

Approximately how many years does it take to double a $300 investment when interest rates are 8 percent per year?

Accepted Answer

A)  0.11 years 
B)  4.17 years 
C)  9 years 
D)  11 years 
A)  0.11 years 
B)  4.17 years 
C)  9 years 
D)  11 years

Question 8

What is the value in year 7 of a $700 cash flow made in year 3 when the interest rates are 10 percent?

Accepted Answer

A)  $478.11 
B)  $980.00 
C)  $1,024.87 
D)  $1,364.10 
A)  $478.11 
B)  $980.00 
C)  $1,024.87 
D)  $1,364.10

Question 9

We call the process of earning interest on both the original deposit and on the earlier interest payments

Accepted Answer

A)  discounting. 
B)  multiplying. 
C)  compounding. 
D)  computing. 
A)  discounting. 
B)  multiplying. 
C)  compounding. 
D)  computing.

Question 10

A $7 million deposit earns 5 percent for nine years. If the account loses 2 percent per year after that, how long will it take to be reduced back to $7 million?

Accepted Answer

A)  6.78 years 
B)  10.29 years 
C)  11.29 years 
D)  21.74 years 
A)  6.78 years 
B)  10.29 years 
C)  11.29 years 
D)  21.74 years

Question 11

What annual rate of return is earned on a $5,000 investment when it grows to $7,000 in six years?

Accepted Answer

A)  1.40 percent 
B)  5.45 percent 
C)  5.77 percent 
D)  40.00 percent 
A)  1.40 percent 
B)  5.45 percent 
C)  5.77 percent 
D)  40.00 percent

Question 12

What is the value in year 4 of a $9,000 cash flow made in year 13 if interest rates are 7 percent in years "4 through 9" and increase to 11 percent after that?

Accepted Answer

A)  $4,226.99 
B)  $4,472.06 
C)  $4,698.17 
D)  $4,716.52 
A)  $4,226.99 
B)  $4,472.06 
C)  $4,698.17 
D)  $4,716.52

Question 13

A firm's net income last year was $2.65 million. Its net income grew 8 percent during the last "5" years. If that growth rate continues, how long will it take for the firm's net income to double?

Accepted Answer

A)  6.6 years 
B)  7.1 years 
C)  8.2 years 
D)  9 years 
A)  6.6 years 
B)  7.1 years 
C)  8.2 years 
D)  9 years

Question 14

Approximately how many years does it take to double a $500 investment when interest rates are 4 percent per year?

Accepted Answer

A)  0.06 year 
B)  6 years 
C)  6.94 years 
D)  18 years 
A)  0.06 year 
B)  6 years 
C)  6.94 years 
D)  18 years

Question 15

The longer money can earn interest,

Accepted Answer

A)  the greater the interest earned on the original deposit exceeds the interest-on-interest. 
B)  the greater the compounding effect. 
C)  the greater the present value must be to reach a financial goal. 
D)  the greater the risk to the investor of not reaching a financial goal. 
A)  the greater the interest earned on the original deposit exceeds the interest-on-interest. 
B)  the greater the compounding effect. 
C)  the greater the present value must be to reach a financial goal. 
D)  the greater the risk to the investor of not reaching a financial goal.

Question 16

With regard to money deposited in a bank, future values are

Accepted Answer

A)  smaller than present values. 
B)  larger than present values. 
C)  equal to present values. 
D)  are completely independent of present values. 
A)  smaller than present values. 
B)  larger than present values. 
C)  equal to present values. 
D)  are completely independent of present values.

Question 17

Determine the interest rate earned on a $1,500 deposit when $1,680 is paid back in one year.

Accepted Answer

A)  0.89 percent 
B)  1.12 percent 
C)  12.00 percent 
D)  89.00 percent 
A)  0.89 percent 
B)  1.12 percent 
C)  12.00 percent 
D)  89.00 percent

Question 18

Determine the interest rate earned on a $450 deposit when $475 is paid back in one year.

Accepted Answer

A)  0.89 percent 
B)  1.13 percent 
C)  5.56 percent 
D)  13.0 percent 
A)  0.89 percent 
B)  1.13 percent 
C)  5.56 percent 
D)  13.0 percent

Question 19

A deposit of $1,000 earns the following interest rates? 8 percent in the first year,
7 percent in the second year, and
8 percent in the third year.
What would be the third year future value?

Accepted Answer

A)  $1,082.15 
B)  $1,230.00 
C)  $1,248.05 
D)  $3,030.00 
A)  $1,082.15 
B)  $1,230.00 
C)  $1,248.05 
D)  $3,030.00

Question 20

Consider a $1,000 deposit earning 7 percent interest per year for four years. How much total interest is earned on the original deposit (excluding interest earned on interest)?

Accepted Answer

A)  $28.00 
B)  $30.00 
C)  $280.00 
D)  $310.00 
A)  $28.00 
B)  $30.00 
C)  $280.00 
D)  $310.00

How long will it take $3,000 to reach $5,000 when it grows at 7 percent per year?

The Rule of four is a simple mathematical approximation for

You deposit $200 in an account that doubles in 10 years. How many years will it take the account to be reduced to its original value if it loses 25 percent per year?

How many years will it take $200 to grow to $250 with an annual interest rate of 4 percent?

What annual rate of return is implied on a $1,000 loan taken next year when $1,500 must be repaid in year 5?

Approximately how many years does it take to double a $300 investment when interest rates are 8 percent per year?

What is the value in year 7 of a $700 cash flow made in year 3 when the interest rates are 10 percent?

We call the process of earning interest on both the original deposit and on the earlier interest payments

A $7 million deposit earns 5 percent for nine years. If the account loses 2 percent per year after that, how long will it take to be reduced back to $7 million?

What annual rate of return is earned on a $5,000 investment when it grows to $7,000 in six years?

What is the value in year 4 of a $9,000 cash flow made in year 13 if interest rates are 7 percent in years "4 through 9" and increase to 11 percent after that?

A firm's net income last year was $2.65 million. Its net income grew 8 percent during the last "5" years. If that growth rate continues, how long will it take for the firm's net income to double?

Approximately how many years does it take to double a $500 investment when interest rates are 4 percent per year?

The longer money can earn interest,

With regard to money deposited in a bank, future values are

Determine the interest rate earned on a $1,500 deposit when $1,680 is paid back in one year.

Determine the interest rate earned on a $450 deposit when $475 is paid back in one year.

A deposit of $1,000 earns the following interest rates? 8 percent in the first year, 7 percent in the second year, and 8 percent in the third year. What would be the third year future value?

Consider a $1,000 deposit earning 7 percent interest per year for four years. How much total interest is earned on the original deposit (excluding interest earned on interest)?

Introduction to Financial Management

Reviewing Financial Statements

Analyzing Financial Statements

Time Value of Money 2: Analyzing Annuity Cash Flows

Understanding Financial Markets and Institutions

Valuing Bonds

Valuing Stocks

Characterizing Risk and Return

Estimating Risk and Return

Calculating the Cost of Capital

Estimating Cash Flows on Capital Budgeting Projects

Weighing Net Present Value and Other Capital Budgeting Criteria

Working Capital Management and Policies

Financial Planning and Forecasting

Assessing Long-Term Debt, Equity, and Capital Structure

Sharing Firm Wealth: Dividends, Share Repurchases, and Other Payouts

Issuing Capital and the Investment Banking Process

International Corporate Finance

Mergers and Acquisitions and Financial Distress

Filters

Exam 4: Time Value of Money 1: Analyzing Single Cash Flows

How long will it take $3,000 to reach $5,000 when it grows at 7 percent per year?

The Rule of four is a simple mathematical approximation for

You deposit $200 in an account that doubles in 10 years. How many years will it take the account to be reduced to its original value if it loses 25 percent per year?

How many years will it take $200 to grow to $250 with an annual interest rate of 4 percent?

What annual rate of return is implied on a $1,000 loan taken next year when $1,500 must be repaid in year 5?

Approximately how many years does it take to double a $300 investment when interest rates are 8 percent per year?

What is the value in year 7 of a $700 cash flow made in year 3 when the interest rates are 10 percent?

We call the process of earning interest on both the original deposit and on the earlier interest payments

A $7 million deposit earns 5 percent for nine years. If the account loses 2 percent per year after that, how long will it take to be reduced back to $7 million?

What annual rate of return is earned on a $5,000 investment when it grows to $7,000 in six years?

What is the value in year 4 of a $9,000 cash flow made in year 13 if interest rates are 7 percent in years "4 through 9" and increase to 11 percent after that?

A firm's net income last year was $2.65 million. Its net income grew 8 percent during the last "5" years. If that growth rate continues, how long will it take for the firm's net income to double?

Approximately how many years does it take to double a $500 investment when interest rates are 4 percent per year?

The longer money can earn interest,

With regard to money deposited in a bank, future values are

Determine the interest rate earned on a $1,500 deposit when $1,680 is paid back in one year.

Determine the interest rate earned on a $450 deposit when $475 is paid back in one year.

A deposit of $1,000 earns the following interest rates? 8 percent in the first year, 7 percent in the second year, and 8 percent in the third year. What would be the third year future value?

Consider a $1,000 deposit earning 7 percent interest per year for four years. How much total interest is earned on the original deposit (excluding interest earned on interest)?

Introduction to Financial Management

Reviewing Financial Statements

Analyzing Financial Statements

Time Value of Money 2: Analyzing Annuity Cash Flows

Understanding Financial Markets and Institutions

Valuing Bonds

Valuing Stocks

Characterizing Risk and Return

Estimating Risk and Return

Calculating the Cost of Capital

Estimating Cash Flows on Capital Budgeting Projects

Weighing Net Present Value and Other Capital Budgeting Criteria

Working Capital Management and Policies

Financial Planning and Forecasting

Assessing Long-Term Debt, Equity, and Capital Structure

Sharing Firm Wealth: Dividends, Share Repurchases, and Other Payouts

Issuing Capital and the Investment Banking Process

International Corporate Finance

Mergers and Acquisitions and Financial Distress

Filters