Exam 3: Applying Time Value Concepts

Judy would like to have $200,000 saved in her retirement account in 20 years.At an interest rate of 10 percent,how much should she contribute each year? (a)$3,491.92 (b)$2,000.00 (c)$2,576.11 (d)$4,376.77

By paying bills electronically,you can delay payments and still ensure on-time payment.

Don wants to know how much he needs to save every year to amass $15,000 in five years at a 5 percent interest rate.What is he calculating using his financial calculator?

Which of the following decisions would involve the use of the present value of $1?

The process of obtaining ________ values is referred to as discounting.

The periodic interest rate,the number of periods,and the payment amount must be known to calculate a present or future value using a financial calculator.

In order to maximize the use of your money,you may want to delay payment of your bills slightly beyond their due dates.

Which of the following decisions would involve the use of the future value of $1?

The same tables can be used to figure future values and present values of $1.

To determine how long it would take an investment to double at 10 percent,you could scan down the 10 percent column until you reach a factor of approximately 2.0 on the ________ table.

Which of the following is not an example of a future value?

In order to take advantage of the time value of money you should do all of the following except

Jack is 35 years old and is planning to retire at age 65.Based on a variety of factors,he is planning a retirement of 20 years.Jack determines that he will need $20,000 during his 20 years of retirement.If he can invest at 9 percent,how much will he need to save beginning today to reach his goal? (a)$11,428.57 (b)$6,086.00 (c)$1,339.47 (d)$20,000.00

To compute how much you would need to save each year for the next 25 years to allow you to withdraw $20,000 for the following 30 years,you would need to use the

At what annual rate would $200.00 grow to $497.60 in five years?

After completing this chapter,do you feel comfortable using your financial calculator for decisions? List several large financial decisions and how you could apply your newly acquired knowledge to make the best choice.

Susie wants to know how much she needs to save today to have $5,000 in five years.Which of the following tables should she use?

If I deposit a sum of money today and wish it to double in 10 years,I will need to receive an interest rate of slightly above ________.

The accumulation of interest over time is called

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