Question 1

Solving for Rates What annual rate of return is earned on a $2,000 investment made in year 3 when it grows to $3,000 by the end of year 6?

Accepted Answer

A) 6.99 percent 
B) 14.47 percent 
C) 24.00 percent 
D) 50.00 percent 
A) 6.99 percent 
B) 14.47 percent 
C) 24.00 percent 
D) 50.00 percent

Question 2

Solving for Rates What annual rate of return is implied on a $700 loan taken next year when $800 must be repaid in year 3?

Accepted Answer

A) 4.55 percent 
B) 4.76 percent 
C) 6.90 percent 
D) 7.14 percent 
A) 4.55 percent 
B) 4.76 percent 
C) 6.90 percent 
D) 7.14 percent

Question 3

You are considering an investment that is expected to pay 5 percent in year 1,7 percent in years 2 and 3 and 9 percent in year 4.If you invest $2,000 today,what will this investment be worth at the end of the fourth year?

Accepted Answer

A) $2,501.42 
B) $2,693.71 
C) $2,713.04 
D) $2,620.68 
A) $2,501.42 
B) $2,693.71 
C) $2,713.04 
D) $2,620.68

Question 4

When calculating the number of years needed to grow an investment to a specific amount of money:

Accepted Answer

A) the lower the interest rate, the shorter the time period needed to achieve the growth. 
B) the higher the interest rate, the shorter the time period needed to achieve the growth. 
C) the interest rate has nothing to do with the length of the time period needed to achieve the growth. 
D) the Rule of 72 is the only way to calculate the time period needed to achieve the growth. 
A) the lower the interest rate, the shorter the time period needed to achieve the growth. 
B) the higher the interest rate, the shorter the time period needed to achieve the growth. 
C) the interest rate has nothing to do with the length of the time period needed to achieve the growth. 
D) the Rule of 72 is the only way to calculate the time period needed to achieve the growth.

Question 5

What is the future value of $2,500 deposited for one year earning a 14 percent interest rate annually?

Accepted Answer

A) $2,550 
B) $2,850 
C) $2,950 
D) $3,150 
A) $2,550 
B) $2,850 
C) $2,950 
D) $3,150

Question 6

A $1,000 investment has doubled to $2,000 in seven years.How much longer will it take for the investment to reach $5,000 if it continues to earn the same rate?

Accepted Answer

A) 6.16 years 
B) 6.86 years 
C) 7.15 years 
D) 9.25 years 
A) 6.16 years 
B) 6.86 years 
C) 7.15 years 
D) 9.25 years

Question 7

You borrow $10,000 and will pay back the entire amount in 10 years.You are charged 6 percent interest per year.How much interest do you pay on this loan?

Accepted Answer

A) $6,000.00 
B) $7,715.61 
C) $7,908.48 
D) $11,193.97 
A) $6,000.00 
B) $7,715.61 
C) $7,908.48 
D) $11,193.97

Question 8

You borrow $3,500 and will pay back the entire amount in 5 years.You are charged 9 percent interest per year.How much interest do you pay on this loan?

Accepted Answer

A) $1,885.18 
B) $1,907.35 
C) $1,959.02 
D) $2,106.81 
A) $1,885.18 
B) $1,907.35 
C) $1,959.02 
D) $2,106.81

Question 9

Multi-Year Future Value How much would be in your savings account in 10 years after depositing $50 today if the bank pays 7 percent interest per year?

Accepted Answer

A) $35.00 
B) $98.36 
C) $535.00 
D) $690.82 
A) $35.00 
B) $98.36 
C) $535.00 
D) $690.82

Question 10

Moving Cash Flows What is the value in year 3 of a $500 cash flow made in year 5 when interest rates are 6 percent?

Accepted Answer

A) $374 
B) $420 
C) $440 
D) $445 
A) $374 
B) $420 
C) $440 
D) $445

Question 11

Scenario A: At age 19 you invest $1,500 that earns 8 percent per year.Scenario B: At age 30 you invest $1,500 that earns 13 percent per year.Under which scenario would you have more money at age 55 and what is the dollar difference at age 55 between the two scenarios?

Accepted Answer

A) Scenario A; $1,085.49 
B) Scenario A; $2,104.73 
C) Scenario B; $4,179.36 
D) Scenario B; $7,893.55 
A) Scenario A; $1,085.49 
B) Scenario A; $2,104.73 
C) Scenario B; $4,179.36 
D) Scenario B; $7,893.55

Question 12

A $7 million deposit earns 5 percent for 9 years.If the account loses 2 percent per year after that,how long will it take to be reduced back to $7 million?

Accepted Answer

A) 6.78 years 
B) 10.29 years 
C) 11.29 years 
D) 21.74 years 
A) 6.78 years 
B) 10.29 years 
C) 11.29 years 
D) 21.74 years

Question 13

Which of the following will not increase a present value?

Accepted Answer

A) Increase the interest rate 
B) Decrease the number of periods 
C) Increase the future value 
D) None of these answers is correct 
A) Increase the interest rate 
B) Decrease the number of periods 
C) Increase the future value 
D) None of these answers is correct

Question 14

A $5,000 investment has doubled to $10,000 in ten years.How much longer will it take for the investment to reach $15,000 if it continues to earn the same rate?

Accepted Answer

A) 5.00 years 
B) 5.85 years 
C) 6.86 years 
D) 7.20 years 
A) 5.00 years 
B) 5.85 years 
C) 6.86 years 
D) 7.20 years

Question 15

Compute the present value of $3,000 paid in four years using the following discount rates: 3 percent in year 1,4 percent in year 2,5 percent in year 3,and 6 percent in year 4.

Accepted Answer

A) $1,998.73 
B) $2,109.14 
C) $2,491.28 
D) $2,516.26 
A) $1,998.73 
B) $2,109.14 
C) $2,491.28 
D) $2,516.26

Question 16

Which of the following statements is correct?

Accepted Answer

A) $100 to be received in the future is worth more than that today since it could be invested and earn interest. 
B) $100 to be received in the future is worth less than that today since it could be invested and earn interest. 
C) The Rule of 72 calculates the compounded return on investments. 
D) Discounting is finding the future value of an original investment. 
A) $100 to be received in the future is worth more than that today since it could be invested and earn interest. 
B) $100 to be received in the future is worth less than that today since it could be invested and earn interest. 
C) The Rule of 72 calculates the compounded return on investments. 
D) Discounting is finding the future value of an original investment.

Question 17

What would be more valuable,receiving $1,895 today or receiving $3,450 in six years if interest rates are 8 percent?

Accepted Answer

A) Receiving $1,895 today 
B) Receiving $3,450 in six years 
C) They are worth the same amount 
D) Need more information to make a determination 
A) Receiving $1,895 today 
B) Receiving $3,450 in six years 
C) They are worth the same amount 
D) Need more information to make a determination

Question 18

What is the future value of $1,000 deposited for one year earning 5 percent interest rate annually?

Accepted Answer

A) $1,000 
B) $1,005 
C) $1,050 
D) $2,050 
A) $1,000 
B) $1,005 
C) $1,050 
D) $2,050

Question 19

An appliance store sells a TV for $1,200 and gives their customers a full three years to pay for the TV.If interest rates are 5 percent,what is the equivalent sales price of the TV when the customer takes the full 3 years to pay for it?

Accepted Answer

A) $991.72 
B) $1,036.61 
C) $1,104.14 
D) $1,389.15 
A) $991.72 
B) $1,036.61 
C) $1,104.14 
D) $1,389.15

Question 20

Moving Cash Flows What is the value in year 15 of a $600 cash flow made in year 3 when the interest rates are 4 percent?

Accepted Answer

A) $374.76 
B) $888.00 
C) $960.62 
D) $1,080.57 
A) $374.76 
B) $888.00 
C) $960.62 
D) $1,080.57

Solving for Rates What annual rate of return is earned on a $2,000 investment made in year 3 when it grows to $3,000 by the end of year 6?

Solving for Rates What annual rate of return is implied on a $700 loan taken next year when $800 must be repaid in year 3?

You are considering an investment that is expected to pay 5 percent in year 1,7 percent in years 2 and 3 and 9 percent in year 4.If you invest $2,000 today,what will this investment be worth at the end of the fourth year?

When calculating the number of years needed to grow an investment to a specific amount of money:

What is the future value of $2,500 deposited for one year earning a 14 percent interest rate annually?

A $1,000 investment has doubled to $2,000 in seven years.How much longer will it take for the investment to reach $5,000 if it continues to earn the same rate?

You borrow $10,000 and will pay back the entire amount in 10 years.You are charged 6 percent interest per year.How much interest do you pay on this loan?

You borrow $3,500 and will pay back the entire amount in 5 years.You are charged 9 percent interest per year.How much interest do you pay on this loan?

Multi-Year Future Value How much would be in your savings account in 10 years after depositing $50 today if the bank pays 7 percent interest per year?

Moving Cash Flows What is the value in year 3 of a $500 cash flow made in year 5 when interest rates are 6 percent?

Scenario A: At age 19 you invest $1,500 that earns 8 percent per year.Scenario B: At age 30 you invest $1,500 that earns 13 percent per year.Under which scenario would you have more money at age 55 and what is the dollar difference at age 55 between the two scenarios?

A $7 million deposit earns 5 percent for 9 years.If the account loses 2 percent per year after that,how long will it take to be reduced back to $7 million?

Which of the following will not increase a present value?

A $5,000 investment has doubled to $10,000 in ten years.How much longer will it take for the investment to reach $15,000 if it continues to earn the same rate?

Compute the present value of $3,000 paid in four years using the following discount rates: 3 percent in year 1,4 percent in year 2,5 percent in year 3,and 6 percent in year 4.

Which of the following statements is correct?

What would be more valuable,receiving $1,895 today or receiving $3,450 in six years if interest rates are 8 percent?

What is the future value of $1,000 deposited for one year earning 5 percent interest rate annually?

An appliance store sells a TV for $1,200 and gives their customers a full three years to pay for the TV.If interest rates are 5 percent,what is the equivalent sales price of the TV when the customer takes the full 3 years to pay for it?

Moving Cash Flows What is the value in year 15 of a $600 cash flow made in year 3 when the interest rates are 4 percent?

Introduction to Financial Management

Reviewing Financial Statements

Analyzing Financial Statements

Time Value of Money

Valuing Bonds

Valuing Stockspart

Characterizing Risk and Return

Estimating Risk and Return

Calculating the Cost of Capital

Estimating Cash Flows on Capital Budgeting Projects

Weighing Net Present Value and Other Capital Budgeting Criteria

Working Capital and Policies

Financial Planning and Forecasting

Assessing Long-Term Debt, equity, and Capital Structure

Sharing Firm Wealth: Dividends, share Repurchases and Other Payouts

Issuing Capital and the Investment Banking Process

International Corporate Finance

Mergers and Acquisitions and Financial Distress

Filters

Exam 4: Time Value of Money

Solving for Rates What annual rate of return is earned on a $2,000 investment made in year 3 when it grows to $3,000 by the end of year 6?

Solving for Rates What annual rate of return is implied on a $700 loan taken next year when $800 must be repaid in year 3?

You are considering an investment that is expected to pay 5 percent in year 1,7 percent in years 2 and 3 and 9 percent in year 4.If you invest $2,000 today,what will this investment be worth at the end of the fourth year?

When calculating the number of years needed to grow an investment to a specific amount of money:

What is the future value of $2,500 deposited for one year earning a 14 percent interest rate annually?

A $1,000 investment has doubled to $2,000 in seven years.How much longer will it take for the investment to reach $5,000 if it continues to earn the same rate?

You borrow $10,000 and will pay back the entire amount in 10 years.You are charged 6 percent interest per year.How much interest do you pay on this loan?

You borrow $3,500 and will pay back the entire amount in 5 years.You are charged 9 percent interest per year.How much interest do you pay on this loan?

Multi-Year Future Value How much would be in your savings account in 10 years after depositing $50 today if the bank pays 7 percent interest per year?

Moving Cash Flows What is the value in year 3 of a $500 cash flow made in year 5 when interest rates are 6 percent?

Scenario A: At age 19 you invest $1,500 that earns 8 percent per year.Scenario B: At age 30 you invest $1,500 that earns 13 percent per year.Under which scenario would you have more money at age 55 and what is the dollar difference at age 55 between the two scenarios?

A $7 million deposit earns 5 percent for 9 years.If the account loses 2 percent per year after that,how long will it take to be reduced back to $7 million?

Which of the following will not increase a present value?

A $5,000 investment has doubled to $10,000 in ten years.How much longer will it take for the investment to reach $15,000 if it continues to earn the same rate?

Compute the present value of $3,000 paid in four years using the following discount rates: 3 percent in year 1,4 percent in year 2,5 percent in year 3,and 6 percent in year 4.

Which of the following statements is correct?

What would be more valuable,receiving $1,895 today or receiving $3,450 in six years if interest rates are 8 percent?

What is the future value of $1,000 deposited for one year earning 5 percent interest rate annually?

An appliance store sells a TV for $1,200 and gives their customers a full three years to pay for the TV.If interest rates are 5 percent,what is the equivalent sales price of the TV when the customer takes the full 3 years to pay for it?

Moving Cash Flows What is the value in year 15 of a $600 cash flow made in year 3 when the interest rates are 4 percent?

Introduction to Financial Management

Reviewing Financial Statements

Analyzing Financial Statements

Time Value of Money

Valuing Bonds

Valuing Stockspart

Characterizing Risk and Return

Estimating Risk and Return

Calculating the Cost of Capital

Estimating Cash Flows on Capital Budgeting Projects

Weighing Net Present Value and Other Capital Budgeting Criteria

Working Capital and Policies

Financial Planning and Forecasting

Assessing Long-Term Debt, equity, and Capital Structure

Sharing Firm Wealth: Dividends, share Repurchases and Other Payouts

Issuing Capital and the Investment Banking Process

International Corporate Finance

Mergers and Acquisitions and Financial Distress

Filters