Question 1

The present value factor for determining the present value of $6,300 to be received three
years from today at 10% interest compounded semiannually is 0.7462.

Accepted Answer

A) True 
 B)False  True

Question 2

The number of periods in a present value calculation can only be expressed in years.

Accepted Answer

A) True 
 B)False  False

Question 3

Explain the concept of the future value of a single amount.

Accepted Answer

The future value of a single amount is equal to the amount that would accumulate at a future date at a specified rate of interest.

Question 4

Jon Shear expects an investment of $25,000 to return $6,595 annually.His investment is earning 10% per year.How many annual payments will he receive?

Accepted Answer

A) Five payments 
B) Six payments 
C) Four payments 
D) Three payments 
E) More than six payments 
A) Five payments 
B) Six payments 
C) Four payments 
D) Three payments 
E) More than six payments

Question 5

Interest is the payment to the owner of an asset for its use by a borrower.

Accepted Answer

A) True 
 B)False

Question 6

Sandra has a savings account that has accumulated to $50,000.She started with
$28,225,and earned interest at 10% compounded annually.It took her five years to
accumulate the $50,000.

Accepted Answer

A) True 
 B)False

Question 7

The future value of an ________________ annuity is the accumulated value of each annuity
payment with interest as of the date of the final payment.

Accepted Answer

The answer of The future value of an ________________ annuity...

Question 8

Sam has a loan that requires a single payment of $4,000 at the end of 3 years.The loan's interest rate is 6%,compounded semiannually.How much did Sam borrow?

Accepted Answer

A) $3,358.40 
B) $4,000.00 
C) $3,660.40 
D) $4,776.40 
E) $3,350.00 
A) $3,358.40 
B) $4,000.00 
C) $3,660.40 
D) $4,776.40 
E) $3,350.00

Question 9

A company is considering investing in a project that is expected to return $350,000 four years from now.How much is the company willing to pay for this investment if the company requires a 12% return?

Accepted Answer

A) $ 55,606 
B) $137,681 
C) $222,425 
D) $265,764 
E) $350,000 
A) $ 55,606 
B) $137,681 
C) $222,425 
D) $265,764 
E) $350,000

Question 10

The present value of 1 formula is often useful when a borrowed asset must be repaid in full
at a later date and the borrower wants to know the worth of the asset at the future date.

Accepted Answer

A) True 
 B)False

Question 11

A company needs to have $200,000 in 4 years,and will create a fund to insure that the $200,000
will be available.If they can earn a 7% return,how much must the company invest in the fund today
to equal the $200,000 at the end of 4 years?

Accepted Answer

Present Value = Future Value

Question 12

What interest rate is required to accumulate $6,802.50 in four years from an investment of $5,000?

Accepted Answer

A) 5% 
B) 8% 
C) 10% 
D) 12% 
E) 15% 
A) 5% 
B) 8% 
C) 10% 
D) 12% 
E) 15%

Question 13

The future value of $100 compounded semiannually for 3 years at 12% equals $140.49.

Accepted Answer

A) True 
 B)False

Question 14

An ordinary annuity refers to a series of equal payments made or received at the end of
each period.

Accepted Answer

A) True 
 B)False

Question 15

Interest is:

Accepted Answer

A) Time. 
B) A borrower's payment to the owner of an asset for its use. 
C) The same as a savings account. 
D) Always a liability. 
E) Always an asset. 
A) Time. 
B) A borrower's payment to the owner of an asset for its use. 
C) The same as a savings account. 
D) Always a liability. 
E) Always an asset.

Question 16

With deposits of $5,000 at the end of each year,you will have accumulated $38,578 at the end of the sixth year if the annual rate of interest is 10%.

Accepted Answer

A) True 
 B)False

Question 17

How long will it take an investment of $25,000 at 6% compounded annually to accumulate to a total of $35,462.50?

Accepted Answer

A) 4 years 
B) 5 years 
C) 6 years 
D) 2 years 
E) 10 years 
A) 4 years 
B) 5 years 
C) 6 years 
D) 2 years 
E) 10 years

Question 18

Troy has $105,000 now.He has a loan of $175,000 that he must pay at the end of 5 years.He can invest his $105,000 at 10% interest compounded semiannually.Will Troy have enough to pay his loan at the end of the 5 years?

Accepted Answer

Future Value = Present Value * Interest

Question 19

_____________ is a borrower's payment to the owner of an asset for its use.

Accepted Answer

The answer of _____________ is a borrower's payment to the...

Question 20

Crowe Company has acquired a building with a loan that requires payments of $20,000 every six months for 5 years.The annual interest rate on the loan is 12%.What is the present value of the
Building?

Accepted Answer

A) $ 72,096 
B) $113,004 
C) $147,202 
D) $ 86,590 
E) $200,000 
A) $ 72,096 
B) $113,004 
C) $147,202 
D) $ 86,590 
E) $200,000

Exam 26: Time Value of Money B

The present value factor for determining the present value of $6,300 to be received three years from today at 10% interest compounded semiannually is 0.7462.

The number of periods in a present value calculation can only be expressed in years.

Explain the concept of the future value of a single amount.

Jon Shear expects an investment of $25,000 to return $6,595 annually.His investment is earning 10% per year.How many annual payments will he receive?

Interest is the payment to the owner of an asset for its use by a borrower.

Sandra has a savings account that has accumulated to $50,000.She started with $28,225,and earned interest at 10% compounded annually.It took her five years to accumulate the $50,000.

The future value of an ________________ annuity is the accumulated value of each annuity payment with interest as of the date of the final payment.

Sam has a loan that requires a single payment of $4,000 at the end of 3 years.The loan's interest rate is 6%,compounded semiannually.How much did Sam borrow?

A company is considering investing in a project that is expected to return $350,000 four years from now.How much is the company willing to pay for this investment if the company requires a 12% return?

The present value of 1 formula is often useful when a borrowed asset must be repaid in full at a later date and the borrower wants to know the worth of the asset at the future date.

A company needs to have $200,000 in 4 years,and will create a fund to insure that the $200,000 will be available.If they can earn a 7% return,how much must the company invest in the fund today to equal the $200,000 at the end of 4 years?

What interest rate is required to accumulate $6,802.50 in four years from an investment of $5,000?

The future value of $100 compounded semiannually for 3 years at 12% equals $140.49.

An ordinary annuity refers to a series of equal payments made or received at the end of each period.

Interest is:

With deposits of $5,000 at the end of each year,you will have accumulated $38,578 at the end of the sixth year if the annual rate of interest is 10%.

How long will it take an investment of $25,000 at 6% compounded annually to accumulate to a total of $35,462.50?

Troy has $105,000 now.He has a loan of $175,000 that he must pay at the end of 5 years.He can invest his $105,000 at 10% interest compounded semiannually.Will Troy have enough to pay his loan at the end of the 5 years?

_____________ is a borrower's payment to the owner of an asset for its use.

Crowe Company has acquired a building with a loan that requires payments of $20,000 every six months for 5 years.The annual interest rate on the loan is 12%.What is the present value of the Building?

Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts and Preparing Financial Statements

Completing the Accounting Cycle

Accounting for Merchandising Operations

Accounting Information Systems

Cash and Internal Controls

Accounting for Receivables

Plant Assets, natural Resources, and Intangibles

Current Liabilities and Payroll Accounting

Accounting for Partnerships

Accounting for Corporations

Long-Term Liabilities

Investments and International Operations

Reporting the Statement of Cash Flows

Analysis of Financial Statements

Managerial Accounting Concepts and Principles

Job Order Costing

Process Costing

Cost-Volume-Profit Analysis

Master Budgets and Planning

Flexible Budgets and Standard Costs

Performance Measurement and Responsibility Accounting

Capital Budgeting and Managerial Decisions

Activity-Based Costing C

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