Question 1

An _____________ is a series of equal payments occurring at equal intervals.

Accepted Answer

The answer of An _____________ is a series of equal...

Question 2

Madera Iron Sculpting is planning on replacing one of its robotic welders in five years by making a one-time deposit of $20,000 today and four yearly contributions of $5,000 beginning at the end of year 1.The deposits will earn 10% interest.How much money will Sierra have accumulated at the end of five years to replace the welder?

Accepted Answer

Future Value = Present Value * Interest

Question 3

A company is considering an investment that will return $20,000 semiannually at the end of each semiannual period for 4 years.If the company requires an annual return of 10%,what is the maximum amount it is willing to pay for this investment?

Accepted Answer

A) Not more than $ 63,398 
B) Not more than $126,796 
C) Not more than $ 80,000 
D) Not more than $129,264 
E) Not more than $160,000 
A) Not more than $ 63,398 
B) Not more than $126,796 
C) Not more than $ 80,000 
D) Not more than $129,264 
E) Not more than $160,000

Question 4

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

Accepted Answer

A) True 
 B)False

Question 5

The future value of an ordinary annuity is the accumulated value of each annuity payment
with interest one period after the date of the final payment.

Accepted Answer

A) True 
 B)False

Question 6

A company is setting up a sinking fund to pay off $8,654,000 in bonds that are due in 7 years.The
fund will earn 7% interest,and the company intends to put away a series of equal year-end amounts
for 7 years.What is the amount of the annual deposits that the company must make?

Accepted Answer

Future Value of an Annuity = Annuity *

Question 7

Explain the concept of the present value of an annuity.

Accepted Answer

The present value of an annuit

Question 8

Chad is setting up a retirement fund,and he plans on depositing $5,000 per year in an investment that will pay 7% annual interest.How long will it take him to reach his retirement goal of $69,080?

Accepted Answer

A) 13.816 years 
B) 0.072 years 
C) 10 years 
D) 20 years 
E) 5 years 
A) 13.816 years 
B) 0.072 years 
C) 10 years 
D) 20 years 
E) 5 years

Question 9

What is interest?

Accepted Answer

Interest represents

Question 10

Annette has a loan that requires a $25,000 payment at the end of three years.The interest rate on
the loan is 5%,compounded annually.How much did Annette borrow today?

Accepted Answer

Present Value = Future Value

Question 11

A company expects to invest $5,000 today at 12% annual interest and plans to receive $15,529 at the end of the investment period.How many years will elapse before the company accumulates the
$15,529?

Accepted Answer

A) 0.322 years 
B) 3.1058 years 
C) 5 years 
D) 8 years 
E) 10 years 
A) 0.322 years 
B) 3.1058 years 
C) 5 years 
D) 8 years 
E) 10 years

Question 12

A company can use present and future value computations to estimate the interest
component of holding assets over time.

Accepted Answer

A) True 
 B)False

Question 13

An interest rate is also called a discount rate.

Accepted Answer

A) True 
 B)False

Question 14

The present value of $2,000 to be received nine years from today at 8% interest
compounded annually is $1,000.

Accepted Answer

A) True 
 B)False

Question 15

What amount can you borrow if you make six quarterly payments of $4,000 at a 12 % annual rate of interest?

Accepted Answer

A) $24,838.00 
B) $21,668.80 
C) $31,049.00 
D) $40,000.00 
E) $44,800.00 
A) $24,838.00 
B) $21,668.80 
C) $31,049.00 
D) $40,000.00 
E) $44,800.00

Question 16

The present value of an annuity table can be used to determine the series of equal payments that are required by a loan agreement.

Accepted Answer

A) True 
 B)False

Question 17

A company is setting aside $21,354 today,and wishes to have $30,000 at the end of three years for
a down payment on a piece of property.What interest rate must the company earn?

Accepted Answer

Present Value = Future Value * Interest

Question 18

Explain the concept of the future value of an annuity.

Accepted Answer

The future value of an annuity

Question 19

A company has $50,000 today to invest in a fund that will earn 7%.How much will the fund
contain at the end of 8 years?

Accepted Answer

Future Value = Present Value

Question 20

Big League Sports borrowed $883,212,and must make annual year-end payments of $120,000
each.If Big League's interest rate is 6%,how many years will it take Big League Sports to pay off the
loan?

Accepted Answer

Present Value of an Annuity = Annuity *

Exam 26: Time Value of Money B

An _____________ is a series of equal payments occurring at equal intervals.

A company is considering an investment that will return $20,000 semiannually at the end of each semiannual period for 4 years.If the company requires an annual return of 10%,what is the maximum amount it is willing to pay for this investment?

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

The future value of an ordinary annuity is the accumulated value of each annuity payment with interest one period after the date of the final payment.

A company is setting up a sinking fund to pay off $8,654,000 in bonds that are due in 7 years.The fund will earn 7% interest,and the company intends to put away a series of equal year-end amounts for 7 years.What is the amount of the annual deposits that the company must make?

Explain the concept of the present value of an annuity.

Chad is setting up a retirement fund,and he plans on depositing $5,000 per year in an investment that will pay 7% annual interest.How long will it take him to reach his retirement goal of $69,080?

What is interest?

Annette has a loan that requires a $25,000 payment at the end of three years.The interest rate on the loan is 5%,compounded annually.How much did Annette borrow today?

A company expects to invest $5,000 today at 12% annual interest and plans to receive $15,529 at the end of the investment period.How many years will elapse before the company accumulates the $15,529?

A company can use present and future value computations to estimate the interest component of holding assets over time.

An interest rate is also called a discount rate.

The present value of $2,000 to be received nine years from today at 8% interest compounded annually is $1,000.

What amount can you borrow if you make six quarterly payments of $4,000 at a 12 % annual rate of interest?

The present value of an annuity table can be used to determine the series of equal payments that are required by a loan agreement.

A company is setting aside $21,354 today,and wishes to have $30,000 at the end of three years for a down payment on a piece of property.What interest rate must the company earn?

Explain the concept of the future value of an annuity.

A company has $50,000 today to invest in a fund that will earn 7%.How much will the fund contain at the end of 8 years?

Big League Sports borrowed $883,212,and must make annual year-end payments of $120,000 each.If Big League's interest rate is 6%,how many years will it take Big League Sports to pay off the loan?

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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