Question 1

What is the present value of $150,000 to be received 10 years from today if the discount rate is 11 percent?

Accepted Answer

A) $52,827.67 
B) $61,147.07 
C) $64,141.41 
D) $69,806.18 
E) $73,291.06 
A) $52,827.67 
B) $61,147.07 
C) $64,141.41 
D) $69,806.18 
E) $73,291.06

Question 2

You are depositing $1,500 in a retirement account today and expect to earn an average return of 7.5 percent on this money.How much additional income will you earn if you leave the money invested for 45 years instead of just 40 years?

Accepted Answer

A) $10,723.08 
B) $11,790.90 
C) $12,441.56 
D) $12,908.19 
E) $13,590.93 
A) $10,723.08 
B) $11,790.90 
C) $12,441.56 
D) $12,908.19 
E) $13,590.93

Question 3

Which one of the following will produce the highest present value interest factor?

Accepted Answer

A) 6 percent interest for five years 
B) 6 percent interest for eight years 
C) 6 percent interest for ten years 
D) 8 percent interest for five years 
E) 8 percent interest for ten years 
A) 6 percent interest for five years 
B) 6 percent interest for eight years 
C) 6 percent interest for ten years 
D) 8 percent interest for five years 
E) 8 percent interest for ten years

Question 4

According to the Rule of 72,you can do which one of the following?

Accepted Answer

A) double your money in five years at 7.2 percent interest 
B) double your money in 7.2 years at 8 percent interest 
C) double your money in 5 years at 14.4 percent interest 
D) triple your money in 7.2 years at 5 percent interest 
E) triple your money at 10 percent interest in 7.2 years 
A) double your money in five years at 7.2 percent interest 
B) double your money in 7.2 years at 8 percent interest 
C) double your money in 5 years at 14.4 percent interest 
D) triple your money in 7.2 years at 5 percent interest 
E) triple your money at 10 percent interest in 7.2 years

Question 5

At an interest rate of 10 percent and using the Rule of 72,how long will it take to double the value of a lump sum invested today?
 How long will it take after that until the account grows to four times the initial investment?
 Given the power of compounding,shouldn't it take less time for the money to double the second time?

Accepted Answer

It will take 7.2 years to double the ini

Question 6

Penn Station is saving money to build a new loading platform.Two years ago,they set aside $24,000 for this purpose.Today,that account is worth $28,399.What rate of interest is Penn Station earning on this investment?

Accepted Answer

A) 6.39 percent 
B) 7.47 percent 
C) 8.78 percent 
D) 9.23 percent 
E) 9.67 percent 
A) 6.39 percent 
B) 7.47 percent 
C) 8.78 percent 
D) 9.23 percent 
E) 9.67 percent

Question 7

You are investing $100 today in a savings account at your local bank.Which one of the following terms refers to the value of this investment one year from now?

Accepted Answer

A) future value 
B) present value 
C) principal amounts 
D) discounted value 
E) invested principal 
A) future value 
B) present value 
C) principal amounts 
D) discounted value 
E) invested principal

Question 8

Gerold invested $5,600 in an account that pays 5 percent simple interest.How much money will he have at the end of ten years?

Accepted Answer

A) $7,710 
B) $8,000 
C) $8,400 
D) $8,678 
E) $9,099 
A) $7,710 
B) $8,000 
C) $8,400 
D) $8,678 
E) $9,099

What is the present value of $150,000 to be received 10 years from today if the discount rate is 11 percent?

You are depositing $1,500 in a retirement account today and expect to earn an average return of 7.5 percent on this money.How much additional income will you earn if you leave the money invested for 45 years instead of just 40 years?

Which one of the following will produce the highest present value interest factor?

According to the Rule of 72,you can do which one of the following?

Penn Station is saving money to build a new loading platform.Two years ago,they set aside $24,000 for this purpose.Today,that account is worth $28,399.What rate of interest is Penn Station earning on this investment?

You are investing $100 today in a savings account at your local bank.Which one of the following terms refers to the value of this investment one year from now?

Gerold invested $5,600 in an account that pays 5 percent simple interest.How much money will he have at the end of ten years?

Introduction to Corporate Finance

Financial Statements, Taxes, and Cash Flow

Working With Financial Statements

Long-Term Financial Planning and Growth

Discounted Cash Flow Valuation

Interest Rates and Bond Valuation

Stock Valuation

Net Present Value and Other Investment Criteria

Making Capital Investment Decisions

Project Analysis and Evaluation

Some Lessons From Capital Market History

Return, Risk, and the Security Market Line

Cost of Capital

Raising Capital

Financial Leverage and Capital Structure Policy

Dividends and Payout Policy

Short-Term Finance and Planning

Cash and Liquidity Management

Credit and Inventory Management

International Corporate Finance

Behavioral Finance: Implications for Financial Management

Enterprise Risk Management

Options and Corporate Finance

Option Valuation

Mergers and Acquisitions

Leasing

Filters

Exam 5: Introduction to Valuation: The Time Value of Money

What is the present value of $150,000 to be received 10 years from today if the discount rate is 11 percent?

You are depositing $1,500 in a retirement account today and expect to earn an average return of 7.5 percent on this money.How much additional income will you earn if you leave the money invested for 45 years instead of just 40 years?

Which one of the following will produce the highest present value interest factor?

According to the Rule of 72,you can do which one of the following?

Penn Station is saving money to build a new loading platform.Two years ago,they set aside $24,000 for this purpose.Today,that account is worth $28,399.What rate of interest is Penn Station earning on this investment?

You are investing $100 today in a savings account at your local bank.Which one of the following terms refers to the value of this investment one year from now?

Gerold invested $5,600 in an account that pays 5 percent simple interest.How much money will he have at the end of ten years?

Introduction to Corporate Finance

Financial Statements, Taxes, and Cash Flow

Working With Financial Statements

Long-Term Financial Planning and Growth

Discounted Cash Flow Valuation

Interest Rates and Bond Valuation

Stock Valuation

Net Present Value and Other Investment Criteria

Making Capital Investment Decisions

Project Analysis and Evaluation

Some Lessons From Capital Market History

Return, Risk, and the Security Market Line

Cost of Capital

Raising Capital

Financial Leverage and Capital Structure Policy

Dividends and Payout Policy

Short-Term Finance and Planning

Cash and Liquidity Management

Credit and Inventory Management

International Corporate Finance

Behavioral Finance: Implications for Financial Management

Enterprise Risk Management

Options and Corporate Finance

Option Valuation

Mergers and Acquisitions

Leasing

Filters