Question 1

The future value of $200 received today and deposited at 8 percent compounded semi-annually for three years is

Accepted Answer

A)  $380. 
B)  $158. 
C)  $253. 
D)  $252. 
A)  $380. 
B)  $158. 
C)  $253. 
D)  $252.

Question 2

Nancy would like to accumulate $10,000 by the end of 3 years from now to buy a sports car from her friend, Jim. She has $2,500 now and would like to save equal annual end-of-year deposits to pay for the car. How much should she deposit at the end of each year in an account paying 8 percent interest to buy the car?

Accepted Answer

Using financial calc

Question 3

What annual rate of return would Jia need to earn if she deposits $20,000 per year into an account beginning one year from today in order to have a total of $1,000,000 in 30 years?

Accepted Answer

A)  2.3% 
B)  3.3% 
C)  1.3% 
D)  4.3% 
A)  2.3% 
B)  3.3% 
C)  1.3% 
D)  4.3%

Question 4

Calculate the future value of an annuity of $5,000 each year for eight years, deposited at 6 percent.

Accepted Answer

FV = 5,000

Question 5

Since individuals are always confronted with opportunities to earn positive rates of return on their funds, the timing of cash flows does not have any significant economic consequences.

Accepted Answer

A) True 
 B)False

Question 6

Marc has purchased a new car for $15,000. He paid $2,500 as down payment and he paid the balance by a loan from his hometown bank. The loan is to be paid on a monthly basis for two years charging 12 percent interest. How much are the monthly payments?

Accepted Answer

PV = 15,000 - 2,500 = $12,500,

Question 7

Mary will receive $12,000 per year for the next 10 years as royalty for her work on a finance book. What is the present value of her royalty income if the opportunity cost is 12 percent?

Accepted Answer

A)  $120,000 
B)  $ 67,800 
C)  $ 38,640 
D)  None of the above. 
A)  $120,000 
B)  $ 67,800 
C)  $ 38,640 
D)  None of the above.

Question 8

Mr. & Mrs. Pribel wish to purchase a boat in 8 years when they retire. They are planning to purchase the boat using proceeds from the sale of their property which is currently worth $90,000 and its value is growing at 7 percent a year. The boat is currently worth $200,000 increasing at 5 percent per year. In addition to the value of their property, how much additional money should they deposit at the end of each year in an account paying 9 percent annual interest in order to be able to buy the boat upon retirement?

Accepted Answer

Value of the property upon retirement:
P

Question 9

If a United States Savings bond can be purchased for $29.50 and has a maturity value at the end of 25 years of $100, what is the annual rate of return on the bond?

Accepted Answer

A)  5 percent 
B)  6 percent 
C)  7 percent 
D)  8 percent 
A)  5 percent 
B)  6 percent 
C)  7 percent 
D)  8 percent

Question 10

The future value of $200 received today and deposited at 8 percent for three years is

Accepted Answer

A)  $248. 
B)  $252. 
C)  $158. 
D)  $200. 
A)  $248. 
B)  $252. 
C)  $158. 
D)  $200.

Question 11

The present value of $100 to be received 10 years from today, assuming an opportunity cost of 9 percent, is

Accepted Answer

A)  $236. 
B)  $699. 
C)  $ 42. 
D)  $ 75. 
A)  $236. 
B)  $699. 
C)  $ 42. 
D)  $ 75.

Question 12

Tom is evaluating the growth rate in dividends of a company over the past 6 years. What is the annual compound growth rate if the dividends are as follows:

Accepted Answer

($2.15/$1.38)^1/5-1 = .0

Question 13

In general, with an amortized loan, the payment amount remains constant over the life of the loan, the principal portion of each payment declines over the life of the loan, and the interest portion declines over the life of the loan.

Accepted Answer

A) True 
 B)False

Question 14

In general, with an amortized loan, the payment amount remains constant over the life of the loan, the principal portion of each payment grows over the life of the loan, and the interest portion of each payment declines over the life of the loan.

Accepted Answer

A) True 
 B)False

Question 15

Nico is the new assistant branch manager of a larger Florida-based bank and the branch manager has asked him a question to test his knowledge. The question he asked is which rate should the bank advertise on monthly-compounded loans, the nominal annual percentage rate or the effective annual percentage rate? Which rate should the bank advertise on quarterly-compounded savings accounts? Explain. As a consumer, which would you prefer to see and why?

Accepted Answer

A bank would rather advertise the annual

Question 16

You have been given the opportunity to earn $20,000 five years from now if you invest $9,524 today. What will be the rate of return to your investment?

Accepted Answer

Use financial calcul

Question 17

Otto is planning for his son's college education to begin ten years from today. He estimates the yearly tuition, books, and living expenses to be $10,000 per year for a four-year degree. How much must Otto deposit today, at an interest rate of 12 percent, for his son to be able to withdraw $10,000 per year for four years of college?

Accepted Answer

A)  $12,880 
B)  $ 9,780 
C)  $40,000 
D)  $18,950 
A)  $12,880 
B)  $ 9,780 
C)  $40,000 
D)  $18,950

Question 18

Future value is the value of a future amount at the present time, found by applying compound interest over a specified period of time.

Accepted Answer

A) True 
 B)False

Question 19

A generous benefactor to the local ballet plans to make a one-time endowment which would provide the ballet with $150,000 per year into perpetuity. The rate of interest is expected to be 5 percent for all future time periods. How large must the endowment be?

Accepted Answer

A)  $ 300,000 
B)  $3,000,000 
C)  $ 750,000 
D)  $1,428,571 
A)  $ 300,000 
B)  $3,000,000 
C)  $ 750,000 
D)  $1,428,571

Question 20

The future value of an ordinary annuity of $1,000 each year for 10 years, deposited at 3 percent, is

Accepted Answer

A)  $11,808. 
B)  $11,464. 
C)  $ 8,530. 
D)  $10,000. 
A)  $11,808. 
B)  $11,464. 
C)  $ 8,530. 
D)  $10,000.

The future value of $200 received today and deposited at 8 percent compounded semi-annually for three years is

What annual rate of return would Jia need to earn if she deposits $20,000 per year into an account beginning one year from today in order to have a total of $1,000,000 in 30 years?

Calculate the future value of an annuity of $5,000 each year for eight years, deposited at 6 percent.

Since individuals are always confronted with opportunities to earn positive rates of return on their funds, the timing of cash flows does not have any significant economic consequences.

Marc has purchased a new car for $15,000. He paid $2,500 as down payment and he paid the balance by a loan from his hometown bank. The loan is to be paid on a monthly basis for two years charging 12 percent interest. How much are the monthly payments?

Mary will receive $12,000 per year for the next 10 years as royalty for her work on a finance book. What is the present value of her royalty income if the opportunity cost is 12 percent?

If a United States Savings bond can be purchased for $29.50 and has a maturity value at the end of 25 years of $100, what is the annual rate of return on the bond?

The future value of $200 received today and deposited at 8 percent for three years is

The present value of $100 to be received 10 years from today, assuming an opportunity cost of 9 percent, is

Tom is evaluating the growth rate in dividends of a company over the past 6 years. What is the annual compound growth rate if the dividends are as follows:

In general, with an amortized loan, the payment amount remains constant over the life of the loan, the principal portion of each payment declines over the life of the loan, and the interest portion declines over the life of the loan.

In general, with an amortized loan, the payment amount remains constant over the life of the loan, the principal portion of each payment grows over the life of the loan, and the interest portion of each payment declines over the life of the loan.

You have been given the opportunity to earn $20,000 five years from now if you invest $9,524 today. What will be the rate of return to your investment?

Future value is the value of a future amount at the present time, found by applying compound interest over a specified period of time.

A generous benefactor to the local ballet plans to make a one-time endowment which would provide the ballet with $150,000 per year into perpetuity. The rate of interest is expected to be 5 percent for all future time periods. How large must the endowment be?

The future value of an ordinary annuity of $1,000 each year for 10 years, deposited at 3 percent, is

The Role of Managerial Finance

The Financial Market Environment

Financial Statements and Ratio Analysis

Cash Flow and Financial Planning

Interest Rates and Bond Valuation

Stock Valuation

Risk and Return

The Cost of Capital

Capital Budgeting Techniques

Capital Budgeting Cash Flows

Risk and Refinements in Capital Budgeting

Leverage and Capital Structure

Payout Policy

Working Capital and Current Assets Management

Current Liabilities Management

Hybrid and Derivative Securities

Mergers, Lbos, Divestitures, and Business Failure

International Managerial Finance

Filters

Exam 5: Time Value of Money

The future value of $200 received today and deposited at 8 percent compounded semi-annually for three years is

What annual rate of return would Jia need to earn if she deposits $20,000 per year into an account beginning one year from today in order to have a total of $1,000,000 in 30 years?

Calculate the future value of an annuity of $5,000 each year for eight years, deposited at 6 percent.

Since individuals are always confronted with opportunities to earn positive rates of return on their funds, the timing of cash flows does not have any significant economic consequences.

Marc has purchased a new car for $15,000. He paid $2,500 as down payment and he paid the balance by a loan from his hometown bank. The loan is to be paid on a monthly basis for two years charging 12 percent interest. How much are the monthly payments?

Mary will receive $12,000 per year for the next 10 years as royalty for her work on a finance book. What is the present value of her royalty income if the opportunity cost is 12 percent?

If a United States Savings bond can be purchased for $29.50 and has a maturity value at the end of 25 years of $100, what is the annual rate of return on the bond?

The future value of $200 received today and deposited at 8 percent for three years is

The present value of $100 to be received 10 years from today, assuming an opportunity cost of 9 percent, is

Tom is evaluating the growth rate in dividends of a company over the past 6 years. What is the annual compound growth rate if the dividends are as follows:

In general, with an amortized loan, the payment amount remains constant over the life of the loan, the principal portion of each payment declines over the life of the loan, and the interest portion declines over the life of the loan.

In general, with an amortized loan, the payment amount remains constant over the life of the loan, the principal portion of each payment grows over the life of the loan, and the interest portion of each payment declines over the life of the loan.

You have been given the opportunity to earn $20,000 five years from now if you invest $9,524 today. What will be the rate of return to your investment?

Future value is the value of a future amount at the present time, found by applying compound interest over a specified period of time.

A generous benefactor to the local ballet plans to make a one-time endowment which would provide the ballet with $150,000 per year into perpetuity. The rate of interest is expected to be 5 percent for all future time periods. How large must the endowment be?

The future value of an ordinary annuity of $1,000 each year for 10 years, deposited at 3 percent, is

The Role of Managerial Finance

The Financial Market Environment

Financial Statements and Ratio Analysis

Cash Flow and Financial Planning

Interest Rates and Bond Valuation

Stock Valuation

Risk and Return

The Cost of Capital

Capital Budgeting Techniques

Capital Budgeting Cash Flows

Risk and Refinements in Capital Budgeting

Leverage and Capital Structure

Payout Policy

Working Capital and Current Assets Management

Current Liabilities Management

Hybrid and Derivative Securities

Mergers, Lbos, Divestitures, and Business Failure

International Managerial Finance

Filters