Question 1

Which interest rate column would you use from a present value table or a future value table for 8% compounded quarterly?

Accepted Answer

A) 12% 
B) 6% 
C) 3% 
D) 2% 
E) 1% 
A) 12% 
B) 6% 
C) 3% 
D) 2% 
E) 1%

Question 2

Thompson Company has acquired a machine from a dealer that requires a payment of $45,000 at
the end of five years.This transaction includes interest at 8%,compounded semiannually.What is the
value of the machine today?

Accepted Answer

Present Value = Future Value

Question 3

The present value of $5,000 per year for three years at 12% compounded annually is
$12,009.

Accepted Answer

A) True 
 B)False

Question 4

To calculate present value of an amount,two factors are required:
 __________________ and
___________________.

Accepted Answer

Interest r

Question 5

A company is beginning a savings plan.It will be saving $15,000 per year for the next 10 years.
How much will the company have accumulated after the tenth year-end deposit,assuming the fund
earns 10% interest?

Accepted Answer

Future Value of an Annuity =

Question 6

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

Accepted Answer

The present value of a single

Question 7

From the perspective of a depositor,a savings account is a liability with interest.

Accepted Answer

A) True 
 B)False

Question 8

A company borrows money from the bank by promising to make 6 annual year-end payments of
$25,000 each.How much is the company able to borrow if the interest rate is 9%?

Accepted Answer

Present Value of an Annuity = Annuity *

Question 9

You are little late planning your retirement,but are looking forward to retiring in 10 years.You
expect to save $6,000 a year at an annual rate of 8%.How much will you have accumulated when you
retire?

Accepted Answer

Future Value of an Annuity =

Question 10

Daley Co.lends $524,210 to Davis Corporation.The terms of the loan require that Davis make six
semiannual period-end payments of $100,000 each.What semiannual interest rate is Davis paying on
the loan?

Accepted Answer

Present Value of an Annuity = Annuity *

Question 11

Future value can be found if the interest rate (i),the number of periods (n),and the present value (p)are known.

Accepted Answer

A) True 
 B)False

Question 12

A company borrows money from the bank by promising to make 8 semiannual payments of $9,000 each.How much is the company able to borrow if the interest rate is 10% compounded semiannually?

Accepted Answer

Present Value of an Annuity = Annuity *

Question 13

Keisha has $3,500 now and plans on investing it in a fund that will pay her 12% interest compounded quarterly.How much will Keisha have accumulated after 2 years?

Accepted Answer

A) $4,433.80 
B) $4,340.00 
C) $4,390.40 
D) $3,920.00 
E) $3,500.00 
A) $4,433.80 
B) $4,340.00 
C) $4,390.40 
D) $3,920.00 
E) $3,500.00

Question 14

When you reach retirement age,you will have one fund of $100,000 from which you are going to make annual withdrawals of $14,702.The fund will earn 6% per year.For how many years will you be able to draw an even amount of $14,702?

Accepted Answer

Present Value of an Annuity = Annuity *

Question 15

An individual is planning to set-up an education fund for her children.She plans to invest $10,000 annually at the end of each year.She expects to withdraw money from the fund at the end of 10 years
And expects to earn an annual return of 8%.What will be the total value of the fund at the end of 10
Years?

Accepted Answer

A) $ 46,320 
B) $ 67,107 
C) $100,000 
D) $144,870 
E) $215,890 
A) $ 46,320 
B) $ 67,107 
C) $100,000 
D) $144,870 
E) $215,890

Question 16

At an annual interest rate of 8% compounded annually,$5,300 will accumulate to a total
of $7,210.65 in 5 years.

Accepted Answer

A) True 
 B)False

Question 17

The interest rate is also called the __________________ rate.

Accepted Answer

The answer of The interest rate is also called the...

Question 18

A company is creating a fund today by depositing $65,763.The fund will grow to $90,000 after 8 years.What annual interest rate is the company earning on the fund?

Accepted Answer

Present Value = Future Value * Interest

Question 19

In a present value or future value table,the length of one time period may be interpreted as one year,one month,or any other length of time.

Accepted Answer

A) True 
 B)False

Question 20

An annuity is a series of equal payments.

Accepted Answer

A) True 
 B)False

Exam 26: Time Value of Money B

Which interest rate column would you use from a present value table or a future value table for 8% compounded quarterly?

Thompson Company has acquired a machine from a dealer that requires a payment of $45,000 at the end of five years.This transaction includes interest at 8%,compounded semiannually.What is the value of the machine today?

The present value of $5,000 per year for three years at 12% compounded annually is $12,009.

To calculate present value of an amount,two factors are required: __________________ and ___________________.

A company is beginning a savings plan.It will be saving $15,000 per year for the next 10 years. How much will the company have accumulated after the tenth year-end deposit,assuming the fund earns 10% interest?

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

From the perspective of a depositor,a savings account is a liability with interest.

A company borrows money from the bank by promising to make 6 annual year-end payments of $25,000 each.How much is the company able to borrow if the interest rate is 9%?

You are little late planning your retirement,but are looking forward to retiring in 10 years.You expect to save $6,000 a year at an annual rate of 8%.How much will you have accumulated when you retire?

Daley Co.lends $524,210 to Davis Corporation.The terms of the loan require that Davis make six semiannual period-end payments of $100,000 each.What semiannual interest rate is Davis paying on the loan?

Future value can be found if the interest rate (i),the number of periods (n),and the present value (p)are known.

A company borrows money from the bank by promising to make 8 semiannual payments of $9,000 each.How much is the company able to borrow if the interest rate is 10% compounded semiannually?

Keisha has $3,500 now and plans on investing it in a fund that will pay her 12% interest compounded quarterly.How much will Keisha have accumulated after 2 years?

When you reach retirement age,you will have one fund of $100,000 from which you are going to make annual withdrawals of $14,702.The fund will earn 6% per year.For how many years will you be able to draw an even amount of $14,702?

At an annual interest rate of 8% compounded annually,$5,300 will accumulate to a total of $7,210.65 in 5 years.

The interest rate is also called the __________________ rate.

A company is creating a fund today by depositing $65,763.The fund will grow to $90,000 after 8 years.What annual interest rate is the company earning on the fund?

In a present value or future value table,the length of one time period may be interpreted as one year,one month,or any other length of time.

An annuity is a series of equal payments.

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

Filters

To calculate present value of an amount,two factors are required: and _.