Exam 4: The Time Value of Money

Assuming that college costs continue to increase an average of 4% per year and that all her college savings are invested in an account paying 7% interest,then what is the amount of money she will need to have available at age 18 to pay for all four years of her undergraduate education?

(Essay)

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Question 41

The future value (FV)at retirement (age 65)of your savings is closest to:

(Multiple Choice)

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Question 42

The present value of an annuity that pays $1 million per year for n years,is $9 million.If the interest rate is 5% per annum,n is approximately equal to how many years?

(Multiple Choice)

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Question 43

In terms of present value (PV),how much will Joe receive for selling the family business?

(Essay)

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Question 44

What is the interest rate of an investment that pays $65 million next year with a current value of $58 million?

(Multiple Choice)

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Question 45

You are considering investing in a zero-coupon bond that will pay you its face value of $1000 in ten years.If the bond is currently selling for $485.20,then the internal rate of return (IRR)for investing in this bond is closest to:

(Multiple Choice)

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Question 46

What is the interest rate if the NPV= $0?

(Multiple Choice)

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Question 47

Can we apply the growth perpetuity equation for negative growth as well?

(Essay)

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Question 48

Use the table for the question(s)below. -If the interest rate is 10%,then which investment(s),if any,would you take and why?

(Essay)

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Question 49

Faisal has $15,000 in his savings account and can save an additional $5000 per year.If interest rates are 12%,how long will it take his savings to grow to $50,000?

(Multiple Choice)

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Question 50

How long will it take $50,000 placed in a savings account at 10% interest to grow into $75,000?

(Multiple Choice)

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Question 51

If $10,000 is invested in a certain business at the start of the year,the investor will receive $3000 at the end of each of the next four years.What is the net present value (NPV)of this business opportunity if the interest rate is 7% per year?

(Multiple Choice)

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Question 52

You are saving money to buy a car.If you save $300 per month starting one month from now at an interest rate of 4%,how much will you be able to spend on the car after saving for 4 years?

(Multiple Choice)

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Question 53

Micha offers to pay an investor of a lump sum in her business today $1000 in one year's time,$2000 in two years' time,$3000 in three years' time and $4000 in 4 years' time.If the interest rate is 8%,what is the minimum value of the lump sum she must ask of an investor if the net present value (NPV)is to be equal to zero?

(Multiple Choice)

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Question 54

A perpetuity will pay $1000 per year,starting five years after the perpetuity is purchased.What is the present value (PV)of this perpetuity on the date that it is purchased,given that the interest rate is 4%?

(Multiple Choice)

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Question 55

Jessica deposits her $2,500 bonus cheque into the bank at the end of 2015.At the end of 2016,she deposits another bonus cheque,which is double the amount of last year's cheque.Given that the interest rate is 5%,what is the total future value of these two bonuses at the end of 2017?

(Multiple Choice)

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Question 56

A growing perpetuity' with a first payment of $17,500 grows at a constant rate,g.If the present value of this perpetuity is $1,000,000,what is the growth rate of the cash flows,given that the interest rate is 6%?

(Multiple Choice)

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Question 57

A consol bond (perpetual bond)pays $27,500 every year.If its present value is $3,000,000,what is the interest rate?

(Multiple Choice)

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Question 58

If the current rate of interest is 8%,then the present value (PV)of an investment that pays $1000 per year and lasts 20 years is closest to:

(Multiple Choice)

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Question 59

The present value (PV)(at age 30)of your retirement savings is closest to:

(Multiple Choice)

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Question 60

Showing 41 - 60 of 101

Exam 4: The Time Value of Money

Assuming that college costs continue to increase an average of 4% per year and that all her college savings are invested in an account paying 7% interest,then what is the amount of money she will need to have available at age 18 to pay for all four years of her undergraduate education?

The future value (FV)at retirement (age 65)of your savings is closest to:

The present value of an annuity that pays $1 million per year for n years,is $9 million.If the interest rate is 5% per annum,n is approximately equal to how many years?

In terms of present value (PV),how much will Joe receive for selling the family business?

What is the interest rate of an investment that pays $65 million next year with a current value of $58 million?

You are considering investing in a zero-coupon bond that will pay you its face value of $1000 in ten years.If the bond is currently selling for $485.20,then the internal rate of return (IRR)for investing in this bond is closest to:

What is the interest rate if the NPV= $0?

Can we apply the growth perpetuity equation for negative growth as well?

Use the table for the question(s)below. -If the interest rate is 10%,then which investment(s),if any,would you take and why?

Faisal has $15,000 in his savings account and can save an additional $5000 per year.If interest rates are 12%,how long will it take his savings to grow to $50,000?

How long will it take $50,000 placed in a savings account at 10% interest to grow into $75,000?

If $10,000 is invested in a certain business at the start of the year,the investor will receive $3000 at the end of each of the next four years.What is the net present value (NPV)of this business opportunity if the interest rate is 7% per year?

You are saving money to buy a car.If you save $300 per month starting one month from now at an interest rate of 4%,how much will you be able to spend on the car after saving for 4 years?

A perpetuity will pay $1000 per year,starting five years after the perpetuity is purchased.What is the present value (PV)of this perpetuity on the date that it is purchased,given that the interest rate is 4%?

Jessica deposits her $2,500 bonus cheque into the bank at the end of 2015.At the end of 2016,she deposits another bonus cheque,which is double the amount of last year's cheque.Given that the interest rate is 5%,what is the total future value of these two bonuses at the end of 2017?

A growing perpetuity' with a first payment of $17,500 grows at a constant rate,g.If the present value of this perpetuity is $1,000,000,what is the growth rate of the cash flows,given that the interest rate is 6%?

A consol bond (perpetual bond)pays $27,500 every year.If its present value is $3,000,000,what is the interest rate?

If the current rate of interest is 8%,then the present value (PV)of an investment that pays $1000 per year and lasts 20 years is closest to:

The present value (PV)(at age 30)of your retirement savings is closest to:

Corporate Finance and the Financial Manager

Introduction to Financial Statement Analysis

The Valuation Principle: the Foundation of Financial Decision Making

Interest Rates

Bonds

Valuing Stocks

Investment Decision Rules

Fundamentals of Capital Budgeting

Risk and Return in Capital Markets

Systematic Risk and the Equity Risk Premium

Determining the Cost of Capital

Risk and the Pricing of Options

Raising Equity Capital

Debt Financing

Capital Structure

Payout Policy

Financial Modelling and Pro Forma Analysis

Working Capital Management

Short-Term Financial Planning

Risk Management

International Corporate Finance

Leasing

Mergers and Acquisitions

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