Question 1

If the interest rate is zero, the future value interest factor equals

Accepted Answer

A) 0)0. 
B) -1.0. 
C) 1)0. 
D) Undefined 
A) 0)0. 
B) -1.0. 
C) 1)0. 
D) Undefined

Question 2

FVA = PMT × FVIFA

Accepted Answer

A) True 
 B)False

Question 3

An annuity refers to the payment of a series of equal cash flow payments at equal intervals of time.

Accepted Answer

A) True 
 B)False

Question 4

If John makes annual year-end payments of $8337.83 on a 20-year loan with an annual interest rate of 7.5 percent., what is the original principal amount for John's loan?

Accepted Answer

A) $82 000 
B) $83 325 
C) $85 700 
D) $85 000 
A) $82 000 
B) $83 325 
C) $85 700 
D) $85 000

Question 5

What is the present value of an ordinary annuity of $1550 each year for 15 years, with an interest rate of 6.6 percent per annum?

Accepted Answer

A) $17 589 
B) $16 500 
C) $14 481 
D) $10 500 
A) $17 589 
B) $16 500 
C) $14 481 
D) $10 500

Question 6

Mary deposits $4000 at the beginning of each year and the money will grow to $1 081 170 in 30 years with 12 percent compounded quarterly.

Accepted Answer

A) True 
 B)False

Question 7

The annual percentage rate (APR)is the nominal interest rate calculated by multiplying the periodic rate by the number of periods in a year.

Accepted Answer

A) True 
 B)False

Question 8

PVA = PMT × PVIFA

Accepted Answer

A) True 
 B)False

Question 9

Ten percent compounded quarterly with 10 years' investment means 40 compounding periods.

Accepted Answer

A) True 
 B)False

Question 10

The shorter the time period, the lower the future value interest factor, other things being equal.

Accepted Answer

A) True 
 B)False

Question 11

The present value of an annuity can be obtained by discounting the individual cash flows of an annuity and totalling them.

Accepted Answer

A) True 
 B)False

Question 12

To calculate the present value, all you need is the amount of money in the future, the interest rate, and the number of years the money will be compounded.

Accepted Answer

A) True 
 B)False

Question 13

The future value interest factor is

Accepted Answer

A) always equal to 1.0. 
B) always less than 1.0. 
C) always greater than 1.0. 
D) always uncertain. 
A) always equal to 1.0. 
B) always less than 1.0. 
C) always greater than 1.0. 
D) always uncertain.

Question 14

Betty wants to accumulate $1 million by the end of 20 years by making equal annual year-end deposits over the next 20 years. Assuming Betty can earn 10 percent over this period, how much must she deposit at the end of each year?

Accepted Answer

A) $18 560 
B) $22 000 
C) $14 760 
D) $17 460 
A) $18 560 
B) $22 000 
C) $14 760 
D) $17 460

Question 15

The future value of $676 received today and deposited at 5.85 percent compounded annually for five years is closest to

Accepted Answer

A) $693. 
B) $962. 
C) $907. 
D) $898. 
A) $693. 
B) $962. 
C) $907. 
D) $898.

Question 16

What is the present value of $1000 to be received ten years from today, assuming an interest rate of nine percent per annum?

Accepted Answer

A) $402. 
B) $488. 
C) $470. 
D) $422. 
A) $402. 
B) $488. 
C) $470. 
D) $422.

Question 17

The higher the interest rate, the higher the future value interest factor, other things being equal.

Accepted Answer

A) True 
 B)False

Question 18

If you have an investment that will receive $100 at the end of year one, $200 at the end of year two, and $300 at the end of year three, what is the market value of this investment today if the discount rate is 13 percent annually?

Accepted Answer

A) $553 
B) $453 
C) $753 
D) $653 
A) $553 
B) $453 
C) $753 
D) $653

Question 19

The future value of $810 received today and deposited at 7.71 percent compounded annually for four years is closest to

Accepted Answer

A) $1620. 
B) $1090. 
C) $1051. 
D) $21 435. 
A) $1620. 
B) $1090. 
C) $1051. 
D) $21 435.

Question 20

The two types of annuity are ordinary annuity and annuity due.

Accepted Answer

A) True 
 B)False

If the interest rate is zero, the future value interest factor equals

FVA = PMT × FVIFA

An annuity refers to the payment of a series of equal cash flow payments at equal intervals of time.

If John makes annual year-end payments of $8337.83 on a 20-year loan with an annual interest rate of 7.5 percent., what is the original principal amount for John's loan?

What is the present value of an ordinary annuity of $1550 each year for 15 years, with an interest rate of 6.6 percent per annum?

Mary deposits $4000 at the beginning of each year and the money will grow to $1 081 170 in 30 years with 12 percent compounded quarterly.

The annual percentage rate (APR)is the nominal interest rate calculated by multiplying the periodic rate by the number of periods in a year.

PVA = PMT × PVIFA

Ten percent compounded quarterly with 10 years' investment means 40 compounding periods.

The shorter the time period, the lower the future value interest factor, other things being equal.

The present value of an annuity can be obtained by discounting the individual cash flows of an annuity and totalling them.

To calculate the present value, all you need is the amount of money in the future, the interest rate, and the number of years the money will be compounded.

The future value interest factor is

Betty wants to accumulate $1 million by the end of 20 years by making equal annual year-end deposits over the next 20 years. Assuming Betty can earn 10 percent over this period, how much must she deposit at the end of each year?

The future value of $676 received today and deposited at 5.85 percent compounded annually for five years is closest to

What is the present value of $1000 to be received ten years from today, assuming an interest rate of nine percent per annum?

The higher the interest rate, the higher the future value interest factor, other things being equal.

If you have an investment that will receive $100 at the end of year one, $200 at the end of year two, and $300 at the end of year three, what is the market value of this investment today if the discount rate is 13 percent annually?

The future value of $810 received today and deposited at 7.71 percent compounded annually for four years is closest to

The two types of annuity are ordinary annuity and annuity due.

Overview of a Financial Plan

Tools for Financial Planning - Planning With Personal Financial Statements

Tools for Financial Planning - Using Tax Concepts for Planning

Banking Services and Managing Your Money

Managing Your Liquidity - Assessing, Managing, and Securing Your Credit

Personal Financing - Personal Loans

Personal Financing - Purchasing and Financing a Home

Protecting Your Wealth - Auto and Homeowners Insurance

Protecting Your Wealth - Health and Life Insurance

Personal Investing - Investing Fundamentals

Personal Investing - Investing in Stocks

Personal Investing - Investing in Bonds

Personal Investing - Investing in Mutual Funds

Retirement and Estate Planning - Retirement Planning

Retirement and Estate Planning - Estate Planning

Synthesis of Financial Planning - Integrating the Components of a Financial Plan

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Exam 2: Tools for Financial Planning - Applying Time Value Concepts

If the interest rate is zero, the future value interest factor equals

FVA = PMT × FVIFA

An annuity refers to the payment of a series of equal cash flow payments at equal intervals of time.

If John makes annual year-end payments of $8337.83 on a 20-year loan with an annual interest rate of 7.5 percent., what is the original principal amount for John's loan?

What is the present value of an ordinary annuity of $1550 each year for 15 years, with an interest rate of 6.6 percent per annum?

Mary deposits $4000 at the beginning of each year and the money will grow to $1 081 170 in 30 years with 12 percent compounded quarterly.

The annual percentage rate (APR)is the nominal interest rate calculated by multiplying the periodic rate by the number of periods in a year.

PVA = PMT × PVIFA

Ten percent compounded quarterly with 10 years' investment means 40 compounding periods.

The shorter the time period, the lower the future value interest factor, other things being equal.

The present value of an annuity can be obtained by discounting the individual cash flows of an annuity and totalling them.

To calculate the present value, all you need is the amount of money in the future, the interest rate, and the number of years the money will be compounded.

The future value interest factor is

Betty wants to accumulate $1 million by the end of 20 years by making equal annual year-end deposits over the next 20 years. Assuming Betty can earn 10 percent over this period, how much must she deposit at the end of each year?

The future value of $676 received today and deposited at 5.85 percent compounded annually for five years is closest to

What is the present value of $1000 to be received ten years from today, assuming an interest rate of nine percent per annum?

The higher the interest rate, the higher the future value interest factor, other things being equal.

If you have an investment that will receive $100 at the end of year one, $200 at the end of year two, and $300 at the end of year three, what is the market value of this investment today if the discount rate is 13 percent annually?

The future value of $810 received today and deposited at 7.71 percent compounded annually for four years is closest to

The two types of annuity are ordinary annuity and annuity due.

Overview of a Financial Plan

Tools for Financial Planning - Planning With Personal Financial Statements

Tools for Financial Planning - Using Tax Concepts for Planning

Banking Services and Managing Your Money

Managing Your Liquidity - Assessing, Managing, and Securing Your Credit

Personal Financing - Personal Loans

Personal Financing - Purchasing and Financing a Home

Protecting Your Wealth - Auto and Homeowners Insurance

Protecting Your Wealth - Health and Life Insurance

Personal Investing - Investing Fundamentals

Personal Investing - Investing in Stocks

Personal Investing - Investing in Bonds

Personal Investing - Investing in Mutual Funds

Retirement and Estate Planning - Retirement Planning

Retirement and Estate Planning - Estate Planning

Synthesis of Financial Planning - Integrating the Components of a Financial Plan

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