Question 1

Interest is the borrower's payment to the owner of an asset, for its use.

Accepted Answer

A) True 
 B)False  True

Question 2

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

Accepted Answer

A) True 
 B)False  False

Question 3

A company needs to have $150,000 in 5 years, and will create a fund to insure that the $150,000 will be available. If it can earn a 6% return compounded annually, how much must the company invest in the fund today to equal the $150,000 at the end of 5 years? (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.)

Accepted Answer

A)  $141,000 
B)  $112,095 
C)  $100,000 
D)  $45,000 
E)  $105,000 
A)  $141,000 
B)  $112,095 
C)  $100,000 
D)  $45,000 
E)  $105,000 B

Question 4

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 5

Interest may be defined as:

Accepted Answer

A)  Time. 
B)  A borrower's payment to the owner of an asset for its use. 
C)  The future value of a present amount. 
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 future value of a present amount. 
D)  Always a liability. 
E)  Always an asset.

Question 6

An interest rate is also called a discount rate.

Accepted Answer

A) True 
 B)False

Question 7

Marshall has received an inheritance and wants to invest a sum of money today that will yield $5,000 at the end of each of the next 10 years. Assuming he can earn an interest rate of 5% compounded annually, how much of his inheritance must he invest today? (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.)

Accepted Answer

A)  $50,000.00 
B)  $47,500.00 
C)  $45,125.00 
D)  $38,608.50 
E)  $100,000.00 
A)  $50,000.00 
B)  $47,500.00 
C)  $45,125.00 
D)  $38,608.50 
E)  $100,000.00

Question 8

Explain the concept of the present value of an annuity.

Accepted Answer

The present value of an annuit

Question 9

If we want to know the value of present-day assets at a future date, we can use:

Accepted Answer

A)  Present value computations. 
B)  Annuity computations. 
C)  Interest computations. 
D)  Future value computations. 
E)  Earnings computations. 
A)  Present value computations. 
B)  Annuity computations. 
C)  Interest computations. 
D)  Future value computations. 
E)  Earnings computations.

Question 10

Jason 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 Jason borrow? (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.)

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 11

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

Accepted Answer

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

Question 12

A company is considering an investment that will return $22,000 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? (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.)

Accepted Answer

A)  Not more than $69,738 
B)  Not more than $139,476 
C)  Not more than $88,000 
D)  Not more than $142,190 
E)  Not more than $176,000 
A)  Not more than $69,738 
B)  Not more than $139,476 
C)  Not more than $88,000 
D)  Not more than $142,190 
E)  Not more than $176,000

Question 13

At an annual interest rate of 8% compounded annually, $5,300 will accumulate to a total of $7,210.65 in 5 years. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.)

Accepted Answer

A) True 
 B)False

Question 14

________ 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 15

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? (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.)

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 16

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

Accepted Answer

A) True 
 B)False

Question 17

Russell 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? (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.)

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

Question 18

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

The answer of A company is beginning a savings plan....

Question 19

The Masterson family is setting up a vacation fund, and they plan on depositing $1,000 per quarter in an investment that will pay 12% annual interest. What amount will they have available for their vacation at the end of 2 years? (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.)

Accepted Answer

A)  $8,000.00 
B)  $8,960.00 
C)  $8,892.30 
D)  $8,240.00 
E)  $8,487.20 
A)  $8,000.00 
B)  $8,960.00 
C)  $8,892.30 
D)  $8,240.00 
E)  $8,487.20

Question 20

What amount can you borrow if you make seven semiannual payments of $4,000 at an 8% annual rate of interest? (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.)

Accepted Answer

A)  $28,000.00 
B)  $25,760.00 
C)  $31,049.00 
D)  $24,008.40 
E)  $35,691.20 
A)  $28,000.00 
B)  $25,760.00 
C)  $31,049.00 
D)  $24,008.40 
E)  $35,691.20

Interest is the borrower's payment to the owner of an asset, for its use.

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

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.

Interest may be defined as:

An interest rate is also called a discount rate.

Explain the concept of the present value of an annuity.

If we want to know the value of present-day assets at a future date, we can use:

Jason 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 Jason borrow? (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.)

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

At an annual interest rate of 8% compounded annually, $5,300 will accumulate to a total of $7,210.65 in 5 years. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.)

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

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? (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.)

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

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?

What amount can you borrow if you make seven semiannual payments of $4,000 at an 8% annual rate of interest? (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.)

Managerial Accounting Concepts and Principles

Job Order Costing and Analysis

Process Costing and Analysis

Activity Based Costing and Analysis

Cost Behavior Cost-Volume-Profit Analysis

Variable Costing and Analysis

Master Budgets and Performance Planning

Flexible Budgets and Standard Costs

Performance Measurement and Responsibility Accounting

Relevant Costing for Managerial Decisions

Capital Budgeting and Investment Analysis

Reporting Cash Flows

Analysis of Financial Statements

Analyzing for Business Transactions

Partnership Accounting

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Exam 14: Time Value of Money

Interest is the borrower's payment to the owner of an asset, for its use.

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

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.

Interest may be defined as:

An interest rate is also called a discount rate.

Explain the concept of the present value of an annuity.

If we want to know the value of present-day assets at a future date, we can use:

Jason 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 Jason borrow? (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.)

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

At an annual interest rate of 8% compounded annually, $5,300 will accumulate to a total of $7,210.65 in 5 years. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.)

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

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? (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.)

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

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?

What amount can you borrow if you make seven semiannual payments of $4,000 at an 8% annual rate of interest? (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.)

Managerial Accounting Concepts and Principles

Job Order Costing and Analysis

Process Costing and Analysis

Activity Based Costing and Analysis

Cost Behavior Cost-Volume-Profit Analysis

Variable Costing and Analysis

Master Budgets and Performance Planning

Flexible Budgets and Standard Costs

Performance Measurement and Responsibility Accounting

Relevant Costing for Managerial Decisions

Capital Budgeting and Investment Analysis

Reporting Cash Flows

Analysis of Financial Statements

Analyzing for Business Transactions

Partnership Accounting

Filters