Question 1

Explain why the interest rates publicized by credit card companies do not reflect the real cost of borrowing incurred on the charges to these cards.

Accepted Answer

The interest rates publicized are annual

Question 2

An investment pays $2,000 every month for 2 years.Your opportunity cost is 10% compounded annually.The present value of this investment is closest to

Accepted Answer

A)  $43,342. 
B)  $43,529. 
C)  $47,405. 
D)  $48,000. 
A)  $43,342. 
B)  $43,529. 
C)  $47,405. 
D)  $48,000.

Question 3

Ingrid has invested $10,000 in a Guaranteed Investment Certificate that promises her 12% per year for the first 5 years and 4% per year for the next 10 years.The interest is compounded annually.At the end of the 15 years,the value of the investment will be closest to which value? (Round your answer to two decimals.)

Accepted Answer

A)  $26,086.96 
B)  $31,721.69 
C)  $32,425.86 
D)  $36,372.55 
A)  $26,086.96 
B)  $31,721.69 
C)  $32,425.86 
D)  $36,372.55

Question 4

When comparing different investment opportunities (each with the same risk)with different interest rates reported in different ways you should

Accepted Answer

A)  convert each interest rate to an annual nominal rate. 
B)  convert each interest rate to a monthly nominal rate. 
C)  convert each interest rate to an effective annual rate. 
D)  compare them by using the published annual rates. 
E)  convert each interest rate to an APR. 
A)  convert each interest rate to an annual nominal rate. 
B)  convert each interest rate to a monthly nominal rate. 
C)  convert each interest rate to an effective annual rate. 
D)  compare them by using the published annual rates. 
E)  convert each interest rate to an APR.

Question 5

Why is a dollar today always worth at least a dollar in the future?

Accepted Answer

A)  because of the risk involved with investing 
B)  because of the opportunity cost of money 
C)  because of inflation 
D)  all of the above 
A)  because of the risk involved with investing 
B)  because of the opportunity cost of money 
C)  because of inflation 
D)  all of the above

Explain why the interest rates publicized by credit card companies do not reflect the real cost of borrowing incurred on the charges to these cards.

An investment pays $2,000 every month for 2 years.Your opportunity cost is 10% compounded annually.The present value of this investment is closest to

When comparing different investment opportunities (each with the same risk)with different interest rates reported in different ways you should

Why is a dollar today always worth at least a dollar in the future?

An Introduction to Finance

Business Corporatefinance

Financial Statements

Financial Statement Analysis and Forecasting

Bond Valuation and Interest Rates

Equity Valuation

Risk, return, and Portfolio Theory

The Capital Asset Pricing Model Capm

Market Efficiency

Forwards,futures,and Swaps

Options

Capital Budgeting, risk Considerations, and Other Special Issues

Cash Flow Estimation and Capital Budgeting Decisions

Mergers and Acquisitions

Leasing

Investment Banking and Securities Law

Debt Instruments

Equity and Hybrid Instruments

Cost of Capital

Capital Structure Decisions

Dividend Policy

Working Capital Management: General Issues

Working Capital Management: Current Assets and Current Liabilities

Filters

Exam 5: Time Value of Money

Explain why the interest rates publicized by credit card companies do not reflect the real cost of borrowing incurred on the charges to these cards.

An investment pays $2,000 every month for 2 years.Your opportunity cost is 10% compounded annually.The present value of this investment is closest to

When comparing different investment opportunities (each with the same risk)with different interest rates reported in different ways you should

Why is a dollar today always worth at least a dollar in the future?

An Introduction to Finance

Business Corporatefinance

Financial Statements

Financial Statement Analysis and Forecasting

Bond Valuation and Interest Rates

Equity Valuation

Risk, return, and Portfolio Theory

The Capital Asset Pricing Model Capm

Market Efficiency

Forwards,futures,and Swaps

Options

Capital Budgeting, risk Considerations, and Other Special Issues

Cash Flow Estimation and Capital Budgeting Decisions

Mergers and Acquisitions

Leasing

Investment Banking and Securities Law

Debt Instruments

Equity and Hybrid Instruments

Cost of Capital

Capital Structure Decisions

Dividend Policy

Working Capital Management: General Issues

Working Capital Management: Current Assets and Current Liabilities

Filters