Exam 4: The Time Value of Money

Consider the following timeline detailing a stream of cash flows: If the current market rate of interest is 10%,then the present value of this stream of cash flows is closest to:

At an annual interest rate of 7%,the present value of $5000 received in five years is closest to:

You are offered an investment opportunity that costs you $28,000,has an NPV of $2278,lasts for three years,has interest rate of 10%,and produces the following cash flows: The missing cash flow from year 2 is closest to:

You are saving for retirement.To live comfortably,you decide that you will need $2.5 million dollars by the time you are 65.If you assume you are able to do that,and will live 20 more years (until age 85),the amount you can withdraw in each of those years at an interest rate of 5% before your retirement fund is empty is closest to:

Define the following terms: (a)perpetuity (b)annuity (c)growing perpetuity (d)growing annuity

The British government has a consol bond outstanding that pays ₤100 in interest each year.Assuming that the current interest rate in Great Britain is 5% and that you will receive your first interest payment immediately upon purchasing the consol bond,then the value of the consol bond is closest to:

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 the amount of money she will need to have available at age 18 to pay for all four years of her undergraduate education is closest to:

Which of the following statements regarding growing annuities is FALSE?

The amount of money that would be in the account if you left the money there until your 65th birthday is closest to:

Which of the following is NOT a valid time value of money function in Excel?

Consider the following timeline: If the current market rate of interest is 10%,then the future value of this timeline is closest to: