Question 1

When the present value of an annuity is calculated, which of the following is not required?

Accepted Answer

A) The number of cash flows. 
B) The interest of discount rate per period. 
C) The future value of the cash flows. 
D) The amount of each repeating cash flow. 
A) The number of cash flows. 
B) The interest of discount rate per period. 
C) The future value of the cash flows. 
D) The amount of each repeating cash flow.

Question 2

Tom Nelson invested $9,000 into an account yielding 6%. How long must he leave the money in the account to obtain $12,060.90?

Accepted Answer

A) 2 years 
B) 3 years 
C) 4 years 
D) 5 years 
A) 2 years 
B) 3 years 
C) 4 years 
D) 5 years

Question 3

Betty has received an inheritance from her uncle. She would like to invest some of the inheritance to pay for her son's college. To pay for college she will need to withdraw $25,000 per year for 4 years beginning 1 year from today. How much must she invest if she can earn 5%?

Accepted Answer

A) $77,397.37 
B) $20,567.50 
C) $31,913.55 
D) $88,648.75 
A) $77,397.37 
B) $20,567.50 
C) $31,913.55 
D) $88,648.75

Question 4

Chuck is looking to invest $15,000 now so that he can purchase a new car in 4 years. The expected price of the car, after tax, title and registration, is expected to be $18,232.65. What is the interest rate required on Chuck's investment to achieve this amount?

Accepted Answer

A) 4% 
B) 5% 
C) 6% 
D) 7% 
A) 4% 
B) 5% 
C) 6% 
D) 7%

Question 5

In present value problems, the interest rate is also called the __________________.

Accepted Answer

discount
d

Question 6

Eric is considering buying a car. He can either purchase the car outright or make 5 annual payments of $10,000 at the end of each year. If the interest rate is 7%, how much is the outright purchase price?

Accepted Answer

A) $14,025.50 
B) $7,129.90 
C) $41,002.00 
D) $57,863.70 
A) $14,025.50 
B) $7,129.90 
C) $41,002.00 
D) $57,863.70

Question 7

Mark would like to retire in 25 years. If he deposits $10,000 at the end of each of the next 25 years into an account earning 7% interest, how much will he have in this account at the end of 25 years?

Accepted Answer

A) $250,000 
B) $758,292.17 
C) $632,490.40 
D) $291,339.50 
A) $250,000 
B) $758,292.17 
C) $632,490.40 
D) $291,339.50

Question 8

When a contract establishes a relationship between an amount borrowed and one or more future cash flows, the initial amount is known as

Accepted Answer

A) future value. 
B) present value. 
C) an annuity. 
D) interest rate. 
A) future value. 
B) present value. 
C) an annuity. 
D) interest rate.

Question 9

Cash flows are described as either single cash flows or _______________.

Accepted Answer

annuities

Question 10

Hanson's Pilings is planning to purchase a new dredge pump in 4 years. Billy Hanson, the owner, invests $11,800 in an account that pays 8% interest compounded quarterly. How much will Mr. Hanson have in the account at the end of 4 years?

Accepted Answer

A) $14,864.58 
B) $16,198.92 
C) $16,053.78 
D) $21,840.97 
A) $14,864.58 
B) $16,198.92 
C) $16,053.78 
D) $21,840.97

Question 11

Harlan Fuller needs $2,000 in 7 years. What amount must he invest in a 6% savings bond?

Accepted Answer

A) $1,425.98 
B) $1,330.12 
C) $9,533.08 
D) $8,200.40 
A) $1,425.98 
B) $1,330.12 
C) $9,533.08 
D) $8,200.40

Question 12

The Future Value is the amount to which an account may grow when interest is compounded.

Accepted Answer

A) True 
 B)False

Question 13

Interest is the time value of money.

Accepted Answer

A) True 
 B)False

Question 14

The interest period is the time interval between interest calculations.

Accepted Answer

A) True 
 B)False

Question 15

When the calculated present value is reversed, the resulting figure is the

Accepted Answer

A) interest accrued. 
B) future value. 
C) total interest earned. 
D) total interest paid. 
A) interest accrued. 
B) future value. 
C) total interest earned. 
D) total interest paid.

Question 16

Wanda Ward makes an investment of $11,800, which pays 8% interest that is compounded quarterly. How much interest will have accrued at the end of 48 months?

Accepted Answer

398.92 (or $4,398.78)
This problem will

Question 17

Calculations of future values are projections of the future balance based upon

Accepted Answer

A) past cash flows. 
B) future cash flows. 
C) past and future cash flows. 
D) expected future cash flows. 
A) past cash flows. 
B) future cash flows. 
C) past and future cash flows. 
D) expected future cash flows.

Question 18

The amount to which an account will grow when interest is compounded is the ______________ value.

Accepted Answer

The answer of The amount to which an account will...

Question 19

Julie expects to receive payments of $1,200 at the end of the year for the next 3 years. Assuming Julie invests the payments into an account earning 8%, how much will she have at the end of the 3 years?

Accepted Answer

A) $3,985.68 
B) $3,600.00 
C) $10,670.81 
D) $3,092.52 
A) $3,985.68 
B) $3,600.00 
C) $10,670.81 
D) $3,092.52

Question 20

The interest rate is the percentage that is multiplied by the future value to yield the amount of interest for that period.

Accepted Answer

A) True 
 B)False

When the present value of an annuity is calculated, which of the following is not required?

Tom Nelson invested $9,000 into an account yielding 6%. How long must he leave the money in the account to obtain $12,060.90?

Betty has received an inheritance from her uncle. She would like to invest some of the inheritance to pay for her son's college. To pay for college she will need to withdraw $25,000 per year for 4 years beginning 1 year from today. How much must she invest if she can earn 5%?

Chuck is looking to invest $15,000 now so that he can purchase a new car in 4 years. The expected price of the car, after tax, title and registration, is expected to be $18,232.65. What is the interest rate required on Chuck's investment to achieve this amount?

In present value problems, the interest rate is also called the __________________.

Eric is considering buying a car. He can either purchase the car outright or make 5 annual payments of $10,000 at the end of each year. If the interest rate is 7%, how much is the outright purchase price?

Mark would like to retire in 25 years. If he deposits $10,000 at the end of each of the next 25 years into an account earning 7% interest, how much will he have in this account at the end of 25 years?

When a contract establishes a relationship between an amount borrowed and one or more future cash flows, the initial amount is known as

Cash flows are described as either single cash flows or _______________.

Hanson's Pilings is planning to purchase a new dredge pump in 4 years. Billy Hanson, the owner, invests $11,800 in an account that pays 8% interest compounded quarterly. How much will Mr. Hanson have in the account at the end of 4 years?

Harlan Fuller needs $2,000 in 7 years. What amount must he invest in a 6% savings bond?

The Future Value is the amount to which an account may grow when interest is compounded.

Interest is the time value of money.

The interest period is the time interval between interest calculations.

When the calculated present value is reversed, the resulting figure is the

Wanda Ward makes an investment of $11,800, which pays 8% interest that is compounded quarterly. How much interest will have accrued at the end of 48 months?

Calculations of future values are projections of the future balance based upon

The amount to which an account will grow when interest is compounded is the ______________ value.

Julie expects to receive payments of $1,200 at the end of the year for the next 3 years. Assuming Julie invests the payments into an account earning 8%, how much will she have at the end of the 3 years?

The interest rate is the percentage that is multiplied by the future value to yield the amount of interest for that period.

Accounting and the Financial Statements

The Accounting Information System

Accrual Accounting

Internal Control and Cash

Sales and Receivables

Cost of Goods Sold and Inventory

Operating Assets

Current and Contingent Liabilities

Long-Term Liabilities

Stockholders Equity

The Statement of Cash Flows

Financial Statement Analysis

Investments

Filters

Exam 14: Time Value of Money

When the present value of an annuity is calculated, which of the following is not required?

Tom Nelson invested $9,000 into an account yielding 6%. How long must he leave the money in the account to obtain $12,060.90?

Betty has received an inheritance from her uncle. She would like to invest some of the inheritance to pay for her son's college. To pay for college she will need to withdraw $25,000 per year for 4 years beginning 1 year from today. How much must she invest if she can earn 5%?

Chuck is looking to invest $15,000 now so that he can purchase a new car in 4 years. The expected price of the car, after tax, title and registration, is expected to be $18,232.65. What is the interest rate required on Chuck's investment to achieve this amount?

In present value problems, the interest rate is also called the __________________.

Eric is considering buying a car. He can either purchase the car outright or make 5 annual payments of $10,000 at the end of each year. If the interest rate is 7%, how much is the outright purchase price?

Mark would like to retire in 25 years. If he deposits $10,000 at the end of each of the next 25 years into an account earning 7% interest, how much will he have in this account at the end of 25 years?

When a contract establishes a relationship between an amount borrowed and one or more future cash flows, the initial amount is known as

Cash flows are described as either single cash flows or _______________.

Hanson's Pilings is planning to purchase a new dredge pump in 4 years. Billy Hanson, the owner, invests $11,800 in an account that pays 8% interest compounded quarterly. How much will Mr. Hanson have in the account at the end of 4 years?

Harlan Fuller needs $2,000 in 7 years. What amount must he invest in a 6% savings bond?

The Future Value is the amount to which an account may grow when interest is compounded.

Interest is the time value of money.

The interest period is the time interval between interest calculations.

When the calculated present value is reversed, the resulting figure is the

Wanda Ward makes an investment of $11,800, which pays 8% interest that is compounded quarterly. How much interest will have accrued at the end of 48 months?

Calculations of future values are projections of the future balance based upon

The amount to which an account will grow when interest is compounded is the ______________ value.

Julie expects to receive payments of $1,200 at the end of the year for the next 3 years. Assuming Julie invests the payments into an account earning 8%, how much will she have at the end of the 3 years?

The interest rate is the percentage that is multiplied by the future value to yield the amount of interest for that period.

Accounting and the Financial Statements

The Accounting Information System

Accrual Accounting

Internal Control and Cash

Sales and Receivables

Cost of Goods Sold and Inventory

Operating Assets

Current and Contingent Liabilities

Long-Term Liabilities

Stockholders Equity

The Statement of Cash Flows

Financial Statement Analysis

Investments

Filters