Question 1

What is the future value of $2,000 deposited for one year earning 6 percent interest rate annually?

Accepted Answer

A)  $120 
B)  $2,000 
C)  $2,120 
D)  $4,120 
A)  $120 
B)  $2,000 
C)  $2,120 
D)  $4,120

Question 2

How many years will it take $200 to grow to $250 with an annual interest rate of 4 percent?

Accepted Answer

A)  1.24 years 
B)  5.69 years 
C)  6.25 years 
D)  18.00 years 
A)  1.24 years 
B)  5.69 years 
C)  6.25 years 
D)  18.00 years

Question 3

What annual rate of return is earned on a $200 investment when it grows to $850 in 10 years?

Accepted Answer

A)  3.25 percent 
B)  4.25 percent 
C)  13.47 percent 
D)  15.57 percent 
A)  3.25 percent 
B)  4.25 percent 
C)  13.47 percent 
D)  15.57 percent

Question 4

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 5

Which is more valuable,receiving $1,000 today or receiving $1,200 in 3 years if interest rates are 7 percent?

Accepted Answer

A)  receiving $1,000 today 
B)  receiving $1,200 in 3 years 
C)  They are worth the same amount. 
D)  need more information to make a determination 
A)  receiving $1,000 today 
B)  receiving $1,200 in 3 years 
C)  They are worth the same amount. 
D)  need more information to make a determination

Question 6

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 7

A dollar paid (or received)in the future is

Accepted Answer

A)  worth more than a dollar paid (or received) today. 
B)  worth as much as a dollar paid (or received) today. 
C)  not worth as much as a dollar paid (or received) today. 
D)  not comparable to a dollar paid (or received) today. 
A)  worth more than a dollar paid (or received) today. 
B)  worth as much as a dollar paid (or received) today. 
C)  not worth as much as a dollar paid (or received) today. 
D)  not comparable to a dollar paid (or received) today.

Question 8

The interest rate,i,which we use to calculate present value,is often referred to as the

Accepted Answer

A)  discount rate. 
B)  multiplier. 
C)  compound rate. 
D)  dividend. 
A)  discount rate. 
B)  multiplier. 
C)  compound rate. 
D)  dividend.

Question 9

How much would be in your savings account in 12 years if you deposited $1,500 today? Assume the bank pays 5 percent per year.

Accepted Answer

A)  $2,387.12 
B)  $2,491.03 
C)  $2,693.78 
D)  $2,771.09 
A)  $2,387.12 
B)  $2,491.03 
C)  $2,693.78 
D)  $2,771.09

Question 10

Compute the present value of $9,000 paid in four years using the following discount rates: 4 percent in year 1,5 percent in year 2,4 percent in year 3,and 3 percent in year 4.

Accepted Answer

A)  $7,693.95 
B)  $8,543.26 
C)  $9,000.00 
D)  $10,823.01 
A)  $7,693.95 
B)  $8,543.26 
C)  $9,000.00 
D)  $10,823.01

Question 11

You invested $1,400 in the stock market one year ago.Today the investment is valued at $1,100.What return did you earn? What return would you need to get back next year to break even overall?

Accepted Answer

A)  −14.62 percent, 31.19 percent 
B)  −9.43 percent, 31.67 percent 
C)  −21.43 percent, 27.27 percent 
D)  −29.17 percent, 32.18 percent 
A)  −14.62 percent, 31.19 percent 
B)  −9.43 percent, 31.67 percent 
C)  −21.43 percent, 27.27 percent 
D)  −29.17 percent, 32.18 percent

Question 12

What annual rate of return is earned on a $13,000 investment made in year 2 when it grows to $17,000 by the end of year 7?

Accepted Answer

A)  10.64 percent 
B)  4.28 percent 
C)  8.04 percent 
D)  5.51 percent 
A)  10.64 percent 
B)  4.28 percent 
C)  8.04 percent 
D)  5.51 percent

Question 13

Which of the following investments would you prefer?

Accepted Answer

A)  an investment earning 6 percent for 10 years 
B)  an investment earning 5 percent for 20 years 
C)  an investment earning 4 percent for 30 years 
D)  an investment earning 3 percent for 40 years 
A)  an investment earning 6 percent for 10 years 
B)  an investment earning 5 percent for 20 years 
C)  an investment earning 4 percent for 30 years 
D)  an investment earning 3 percent for 40 years

What is the future value of $2,000 deposited for one year earning 6 percent interest rate annually?

How many years will it take $200 to grow to $250 with an annual interest rate of 4 percent?

What annual rate of return is earned on a $200 investment when it grows to $850 in 10 years?

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

Which is more valuable,receiving $1,000 today or receiving $1,200 in 3 years if interest rates are 7 percent?

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

A dollar paid (or received)in the future is

The interest rate,i,which we use to calculate present value,is often referred to as the

How much would be in your savings account in 12 years if you deposited $1,500 today? Assume the bank pays 5 percent per year.

Compute the present value of $9,000 paid in four years using the following discount rates: 4 percent in year 1,5 percent in year 2,4 percent in year 3,and 3 percent in year 4.

You invested $1,400 in the stock market one year ago.Today the investment is valued at $1,100.What return did you earn? What return would you need to get back next year to break even overall?

What annual rate of return is earned on a $13,000 investment made in year 2 when it grows to $17,000 by the end of year 7?

Which of the following investments would you prefer?

Introduction to Financial Management

Reviewing Financial Statements

Analyzing Financial Statements

Time Value of Money 2: Analyzing Annuity Cash Flows

Understanding Financial Markets and Institutions

Valuing Bonds

Valuing Stocks

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 Management and Policies

Filters

Exam 4: Time Value of Money 1: Analyzing Single Cash Flows

What is the future value of $2,000 deposited for one year earning 6 percent interest rate annually?

How many years will it take $200 to grow to $250 with an annual interest rate of 4 percent?

What annual rate of return is earned on a $200 investment when it grows to $850 in 10 years?

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

Which is more valuable,receiving $1,000 today or receiving $1,200 in 3 years if interest rates are 7 percent?

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

A dollar paid (or received)in the future is

The interest rate,i,which we use to calculate present value,is often referred to as the

How much would be in your savings account in 12 years if you deposited $1,500 today? Assume the bank pays 5 percent per year.

Compute the present value of $9,000 paid in four years using the following discount rates: 4 percent in year 1,5 percent in year 2,4 percent in year 3,and 3 percent in year 4.

You invested $1,400 in the stock market one year ago.Today the investment is valued at $1,100.What return did you earn? What return would you need to get back next year to break even overall?

What annual rate of return is earned on a $13,000 investment made in year 2 when it grows to $17,000 by the end of year 7?

Which of the following investments would you prefer?

Introduction to Financial Management

Reviewing Financial Statements

Analyzing Financial Statements

Time Value of Money 2: Analyzing Annuity Cash Flows

Understanding Financial Markets and Institutions

Valuing Bonds

Valuing Stocks

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 Management and Policies

Filters