Exam 9: The Time Value of Money

Discounted at 10%, $1,000 received at the end of each year for three years is worth less than $2,700 received today. PV_A = A × PV_IFA (App. D: 3 periods, 10%) = $1,000 × 2.487 = $2,487

(True/False)

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Question 81

Mike Carlson will receive $12,000 a year from the end of the third year to the end of the 12^th year (10 payments). The discount rate is 10%. The present value today of this deferred annuity is ______.

(Multiple Choice)

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Question 82

The interest factor (IF) for the future value of an ordinary annuity is 4.641 at 10% for four years. If we wish to accumulate $8,000 by the end of four years, how much should the annual payments be?

(Multiple Choice)

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Question 83

As the time period until receipt increases, the present value of an amount at a fixed interest rate

(Multiple Choice)

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Question 84

In determining the future value of an ordinary annuity, the final payment is not compounded at all.

(True/False)

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Question 85

The shorter the length of time between a present value and its corresponding future value,

(Multiple Choice)

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Question 86

In paying off a mortgage loan, the amount of the periodic payment that goes toward the reduction of principal increases over the life of the mortgage.

(True/False)

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Question 87

In determining the future value of a single amount, one measures

(Multiple Choice)

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Question 88

Discounting refers to the growth process that turns $1 today into a greater value several periods in the future.

(True/False)

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Question 89

Sydney saved $10,000 during her first year of work after college and plans to invest it for her retirement in 40 years. How much will she have available for retirement if she can make 8% on her investment?

(Multiple Choice)

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Question 90

Increasing the number of periods will increase all of the following except

(Multiple Choice)

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Question 91

Using semi-annual compounding rather than annual compounding will increase the future value of an annuity.

(True/False)

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Question 92

You will deposit $2,000 today. It will grow for six years at 10% interest compounded semi-annually. You will then withdraw the funds annually over the next four years at the end of each year. The annual interest rate is 8%. Your annual withdrawal will be approximately ______.

(Multiple Choice)

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Question 93

When the inflation rate is zero, the present value of $1 is identical to the future value of $1.

(True/False)

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Question 94

If you invest $10,000 today at 10% interest, how much will you have in 10 years?

(Multiple Choice)

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Question 95

As the interest rate increases, the interest factor (IF) for the present value of $1 increases.

(True/False)

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Question 96

The future value is the same concept as the way money grows in a bank account.

(True/False)

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Question 97

The time value of money concept is fundamental to the analysis of cash inflow and outflow decisions covering multiple periods of time.

(True/False)

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Question 98

Showing 81 - 98 of 98

Discounted at 10%, $1,000 received at the end of each year for three years is worth less than $2,700 received today. PV_A = A × PV_IFA (App. D: 3 periods, 10%) = $1,000 × 2.487 = $2,487

Mike Carlson will receive $12,000 a year from the end of the third year to the end of the 12^th year (10 payments). The discount rate is 10%. The present value today of this deferred annuity is ______.

The interest factor (IF) for the future value of an ordinary annuity is 4.641 at 10% for four years. If we wish to accumulate $8,000 by the end of four years, how much should the annual payments be?

As the time period until receipt increases, the present value of an amount at a fixed interest rate

In determining the future value of an ordinary annuity, the final payment is not compounded at all.

The shorter the length of time between a present value and its corresponding future value,

In paying off a mortgage loan, the amount of the periodic payment that goes toward the reduction of principal increases over the life of the mortgage.

In determining the future value of a single amount, one measures

Discounting refers to the growth process that turns $1 today into a greater value several periods in the future.

Sydney saved $10,000 during her first year of work after college and plans to invest it for her retirement in 40 years. How much will she have available for retirement if she can make 8% on her investment?

Increasing the number of periods will increase all of the following except

Using semi-annual compounding rather than annual compounding will increase the future value of an annuity.

You will deposit $2,000 today. It will grow for six years at 10% interest compounded semi-annually. You will then withdraw the funds annually over the next four years at the end of each year. The annual interest rate is 8%. Your annual withdrawal will be approximately ______.

When the inflation rate is zero, the present value of $1 is identical to the future value of $1.

If you invest $10,000 today at 10% interest, how much will you have in 10 years?

As the interest rate increases, the interest factor (IF) for the present value of $1 increases.

The future value is the same concept as the way money grows in a bank account.

The time value of money concept is fundamental to the analysis of cash inflow and outflow decisions covering multiple periods of time.

The Goals and Activities of Financial Management

Review of Accounting

Financial Analysis

Financial Forecasting

Operating and Financial Leverage

Working Capital and the Financing Decision

Current Asset Management

Sources of Short-Term Financing

Valuation and Rates of Return

Cost of Capital

The Capital Budgeting Decision

Risk and Capital Budgeting

Capital Markets

Investment Banking: Public and Private Placement

Long-Term Debt and Lease Financing

Common and Preferred Stock Financing

Dividend Policy and Retained Earnings

Convertibles, Warrants and Derivatives

External Growth Through Mergers

International Financial Management

Filters

Exam 9: The Time Value of Money

Discounted at 10%, $1,000 received at the end of each year for three years is worth less than $2,700 received today. PVA = A × PVIFA (App. D: 3 periods, 10%) = $1,000 × 2.487 = $2,487

Mike Carlson will receive $12,000 a year from the end of the third year to the end of the 12th year (10 payments). The discount rate is 10%. The present value today of this deferred annuity is ______.

The interest factor (IF) for the future value of an ordinary annuity is 4.641 at 10% for four years. If we wish to accumulate $8,000 by the end of four years, how much should the annual payments be?

As the time period until receipt increases, the present value of an amount at a fixed interest rate

In determining the future value of an ordinary annuity, the final payment is not compounded at all.

The shorter the length of time between a present value and its corresponding future value,

In paying off a mortgage loan, the amount of the periodic payment that goes toward the reduction of principal increases over the life of the mortgage.

In determining the future value of a single amount, one measures

Discounting refers to the growth process that turns $1 today into a greater value several periods in the future.

Sydney saved $10,000 during her first year of work after college and plans to invest it for her retirement in 40 years. How much will she have available for retirement if she can make 8% on her investment?

Increasing the number of periods will increase all of the following except

Using semi-annual compounding rather than annual compounding will increase the future value of an annuity.

You will deposit $2,000 today. It will grow for six years at 10% interest compounded semi-annually. You will then withdraw the funds annually over the next four years at the end of each year. The annual interest rate is 8%. Your annual withdrawal will be approximately ______.

When the inflation rate is zero, the present value of $1 is identical to the future value of $1.

If you invest $10,000 today at 10% interest, how much will you have in 10 years?

As the interest rate increases, the interest factor (IF) for the present value of $1 increases.

The future value is the same concept as the way money grows in a bank account.

The time value of money concept is fundamental to the analysis of cash inflow and outflow decisions covering multiple periods of time.

The Goals and Activities of Financial Management

Review of Accounting

Financial Analysis

Financial Forecasting

Operating and Financial Leverage

Working Capital and the Financing Decision

Current Asset Management

Sources of Short-Term Financing

Valuation and Rates of Return

Cost of Capital

The Capital Budgeting Decision

Risk and Capital Budgeting

Capital Markets

Investment Banking: Public and Private Placement

Long-Term Debt and Lease Financing

Common and Preferred Stock Financing

Dividend Policy and Retained Earnings

Convertibles, Warrants and Derivatives

External Growth Through Mergers

International Financial Management

Filters

Discounted at 10%, $1,000 received at the end of each year for three years is worth less than $2,700 received today. PV_A = A × PV_IFA (App. D: 3 periods, 10%) = $1,000 × 2.487 = $2,487

Mike Carlson will receive $12,000 a year from the end of the third year to the end of the 12^th year (10 payments). The discount rate is 10%. The present value today of this deferred annuity is ______.