Question 1

The future value of your savings and debt affect all except which of the following?

Accepted Answer

A) Financial planning tools 
B) Protecting your wealth 
C) Liquidity management 
D) Marketing management 
A) Financial planning tools 
B) Protecting your wealth 
C) Liquidity management 
D) Marketing management

Question 2

Carol would like to have $500,000 saved in her retirement account in 30 years at an interest rate of 10 percent.How much should she contribute each year?

Accepted Answer

A) $2,182.00 
B) $2,000.00 
C) $1,956.20 
D) $3,039.62 
A) $2,182.00 
B) $2,000.00 
C) $1,956.20 
D) $3,039.62

Question 3

Present and future values concepts are not applied to which of the following?

Accepted Answer

A) Payments on a home 
B) Calculation of withdrawals needed during retirement 
C) Calculation of savings for a large purchase 
D) The balance of your checking account today 
A) Payments on a home 
B) Calculation of withdrawals needed during retirement 
C) Calculation of savings for a large purchase 
D) The balance of your checking account today

Question 4

An annuity is a stream of equal payments that are received or paid at random periods of time.

Accepted Answer

A) True 
 B)False

Question 5

How many years will it take for $500 to grow to $1,039.50 if invested at 5 percent compounded annually?

Accepted Answer

A) 15 
B) 14 
C) 13 
D) 12 
A) 15 
B) 14 
C) 13 
D) 12

Question 6

Time value of money is only applied to single dollar amounts.

Accepted Answer

A) True 
 B)False

Question 7

If Jim wants $25,000 in five years and can earn an 8 percent interest rate,how much does he need to invest today? (Note-Solve as a Present Value problem.)
(a)$16,108
(b)$17,025
(c)$15,158
(d)$17,829

Accepted Answer

Note-This problem can be solved using ei

Question 8

Which of the following decisions would involve the use of the future value of a $1 ordinary annuity table?

Accepted Answer

A) Your brother buys your car and offers to pay you $500 now or $1,500 in two years 
B) You win a lawsuit and are offered a lump sum payment today of $100,000 or $15,000 a year for 20 years 
C) Your father and mother wish to deposit enough money on the date of your high school graduation to enable you to take a $7,000 cruise when you graduate from college in 4 years 
D) You want to have $1,000,000 in order to retire at age 55,but need to know how much you will need to deposit each year from now until your 55th birthday 
A) Your brother buys your car and offers to pay you $500 now or $1,500 in two years 
B) You win a lawsuit and are offered a lump sum payment today of $100,000 or $15,000 a year for 20 years 
C) Your father and mother wish to deposit enough money on the date of your high school graduation to enable you to take a $7,000 cruise when you graduate from college in 4 years 
D) You want to have $1,000,000 in order to retire at age 55,but need to know how much you will need to deposit each year from now until your 55th birthday

Question 9

It is always better to choose a lump sum rather than to choose periodic payments over time.This is why nearly all lottery winners choose the lump sum payment.

Accepted Answer

A) True 
 B)False

Question 10

The Present Value Interest Factor (PVIF)becomes lower as the number of years increases.

Accepted Answer

A) True 
 B)False

Question 11

Information can be easily found on Web sites that will assist you in determining all of the following except

Accepted Answer

A) proceeds you will receive when selling your house. 
B) loan rates,length of loan,and principal. 
C) stock quotes and company information. 
D) credit card applications and information. 
A) proceeds you will receive when selling your house. 
B) loan rates,length of loan,and principal. 
C) stock quotes and company information. 
D) credit card applications and information.

Question 12

Future and present values are dependent upon all of the following except

Accepted Answer

A) time. 
B) the interest rate. 
C) a present or the future value interest factor,depending on the problem. 
D) annual income. 
A) time. 
B) the interest rate. 
C) a present or the future value interest factor,depending on the problem. 
D) annual income.

Question 13

A stream of equal payments either received or paid at equal time intervals is a(n)________.

Accepted Answer

The answer of A stream of equal payments either received...

Question 14

If Art wants $35,000 in 10 years and can earn a 12 percent interest rate,how much does he need to invest today?

Accepted Answer

A) $10,538 
B) $10,310 
C) $11,270 
D) $14,375 
A) $10,538 
B) $10,310 
C) $11,270 
D) $14,375

Question 15

Jerry wants to know how much he needs to save every year to accumulate $15,000 in five years at a 10 percent interest rate.Which of the following tables should he use?

Accepted Answer

A) Present value $1 
B) Present value ordinary annuity 
C) Future value $1 
D) Future value ordinary annuity 
A) Present value $1 
B) Present value ordinary annuity 
C) Future value $1 
D) Future value ordinary annuity

Question 16

To determine how much you would need to save each year to reach a specific goal,you would use

Accepted Answer

A) Present Value of $1. 
B) Future Value of $1. 
C) Present Value of an annuity. 
D) Future Value of an annuity. 
A) Present Value of $1. 
B) Future Value of $1. 
C) Present Value of an annuity. 
D) Future Value of an annuity.

Question 17

Time value of money computations relate to future value of lump sum cash flows only.

Accepted Answer

A) True 
 B)False

Question 18

How many years will it take for $35 to grow to $53.87 if invested at 9 percent compounded annually?

Accepted Answer

A) 6)0 
B) 5)5 
C) 5)0 
D) 4)0 
A) 6)0 
B) 5)5 
C) 5)0 
D) 4)0

Question 19

Time value calculations such as present and future value amounts should be used regularly in your life.

Accepted Answer

A) True 
 B)False

Question 20

You utilize present and future value concepts in investment,purchase,and retirement decisions.

Accepted Answer

A) True 
 B)False

Exam 3: Applying Time Value Concepts

The future value of your savings and debt affect all except which of the following?

Carol would like to have $500,000 saved in her retirement account in 30 years at an interest rate of 10 percent.How much should she contribute each year?

Present and future values concepts are not applied to which of the following?

An annuity is a stream of equal payments that are received or paid at random periods of time.

How many years will it take for $500 to grow to $1,039.50 if invested at 5 percent compounded annually?

Time value of money is only applied to single dollar amounts.

If Jim wants $25,000 in five years and can earn an 8 percent interest rate,how much does he need to invest today? (Note-Solve as a Present Value problem.) (a)$16,108 (b)$17,025 (c)$15,158 (d)$17,829

Which of the following decisions would involve the use of the future value of a $1 ordinary annuity table?

It is always better to choose a lump sum rather than to choose periodic payments over time.This is why nearly all lottery winners choose the lump sum payment.

The Present Value Interest Factor (PVIF)becomes lower as the number of years increases.

Information can be easily found on Web sites that will assist you in determining all of the following except

Future and present values are dependent upon all of the following except

A stream of equal payments either received or paid at equal time intervals is a(n)________.

If Art wants $35,000 in 10 years and can earn a 12 percent interest rate,how much does he need to invest today?

Jerry wants to know how much he needs to save every year to accumulate $15,000 in five years at a 10 percent interest rate.Which of the following tables should he use?

To determine how much you would need to save each year to reach a specific goal,you would use

Time value of money computations relate to future value of lump sum cash flows only.

How many years will it take for $35 to grow to $53.87 if invested at 9 percent compounded annually?

Time value calculations such as present and future value amounts should be used regularly in your life.

You utilize present and future value concepts in investment,purchase,and retirement decisions.

Overview of a Financial Plan

Planning With Personal Financial Statements

Using Tax Concepts for Planning

Banking and Interest Rates

Managing Your Money

Assessing and Securing Your Credit

Managing Your Credit

Personal Loans

Purchasing and Financing a Home

Auto and Homeowners Insurance

Health and Disability Insurance

Life Insurance

Investing Fundamentals

Investing in Stocks

Investing in Bonds

Investing in Mutual Funds

Asset Allocation

Retirement Planning

Estate Planning

Integrating the Components of a Financial Plan

Filters