Question 1

An investment today of $3300 is worth $10,000 in 8 years.At what rate has your investment been growing (annually)over the 8 years?

Accepted Answer

$10,000 = 3300(1 + r)⁸; 10,000/

Question 2

What is the present value of 10 payments of $500 each received every 24 months at a discount rate of 12%?

Accepted Answer

A)  $1,840.93 
B)  $1,332.60 
C)  $2,825.11. 
D)  $1,761.66 
A)  $1,840.93 
B)  $1,332.60 
C)  $2,825.11. 
D)  $1,761.66

Question 3

An annuity factor:

Accepted Answer

A)  can be used to determine the present value of a level stream of payments. 
B)  consists entirely of maturation and interest. 
C)  is a variable that can never be greater than one. 
D)  is any factor that affects the price of a bond. 
A)  can be used to determine the present value of a level stream of payments. 
B)  consists entirely of maturation and interest. 
C)  is a variable that can never be greater than one. 
D)  is any factor that affects the price of a bond.

Question 4

Charles Carr borrowed $3,500 to consolidate his debts.Since Charles had an excellent credit rating,he was able to borrow at a 12% effective annual rate.Charles is required to make monthly payments.Charles will make equal payments for the next 36 months.Which one of the following values is closest to his monthly payments?

Accepted Answer

A)  $121 
B)  $122 
C)  $115 
D)  $118 
E)  $123 
A)  $121 
B)  $122 
C)  $115 
D)  $118 
E)  $123

Question 5

As the winner of the Housecleaners sweepstakes,you are entitled to one of the following prizes:
A. $999,999 immediately.
B. $100,000 per year forever.
C. $180,000 per year for the next 10 years starting immediately.
D. $400,000 payable every 2 years over 20 years.
E. $39,000 next year growing by 6% forever.
In terms of present values, which prize should be chosen if r = 9%?

Accepted Answer

PV = $999,999
PV = $

Question 6

A sports team in an effort to solve the salary cap problem has offered a player a contract of $1 million dollars a year for the next season with the payments growing at 7% per year for the next 25 years.The player believes the discount rate for such payments is 13%.What is the value today of taking this contract?

Accepted Answer

A)  $12,405,955.40 
B)  $16,666,666.67 
C)  $884,956.09 
D)  $5,824,965.76 
A)  $12,405,955.40 
B)  $16,666,666.67 
C)  $884,956.09 
D)  $5,824,965.76

Question 7

A "little seven" accounting firm offers to pay you a year-end bonus of $5,000 for 3 years if you will accept employment with them and stay for the entire 3-year period.Which of the following amounts is closest to the present value of the bonus if the interest rate is 10%?

Accepted Answer

A)  $5,000. 
B)  $11,270. 
C)  $12,434. 
D)  $15,000. 
E)  $31,576. 
A)  $5,000. 
B)  $11,270. 
C)  $12,434. 
D)  $15,000. 
E)  $31,576.

Question 8

Your parents are giving you $100 a month for four years while you are in college.At a 6% discount rate,what are these payments worth to you when you first start college?

Accepted Answer

A)  $3,797.40 
B)  $4,167.09 
C)  $4,198.79 
D)  $4,258.03 
E)  $4,279.32 
A)  $3,797.40 
B)  $4,167.09 
C)  $4,198.79 
D)  $4,258.03 
E)  $4,279.32

Question 9

The equation [Ct/(1 + r)t] provides:

Accepted Answer

A)  the compound value of a series of payments with a single interest rate. 
B)  the compound value of a series of payments with a series of interest rates. 
C)  the compound value of a single payment. 
D)  the present value of a series of payments with a single interest rate. 
E)  the present value of a single payment. 
A)  the compound value of a series of payments with a single interest rate. 
B)  the compound value of a series of payments with a series of interest rates. 
C)  the compound value of a single payment. 
D)  the present value of a series of payments with a single interest rate. 
E)  the present value of a single payment.

An investment today of $3300 is worth $10,000 in 8 years.At what rate has your investment been growing (annually)over the 8 years?

What is the present value of 10 payments of $500 each received every 24 months at a discount rate of 12%?

An annuity factor:

A "little seven" accounting firm offers to pay you a year-end bonus of $5,000 for 3 years if you will accept employment with them and stay for the entire 3-year period.Which of the following amounts is closest to the present value of the bonus if the interest rate is 10%?

Your parents are giving you $100 a month for four years while you are in college.At a 6% discount rate,what are these payments worth to you when you first start college?

The equation [Ct/(1 + r)^t] provides:

Introduction to Corporate Finance

Accounting Statements and Cash Flow

Financial Planning and Growth

Financial Markets and Net Present Value: First Principles of Finance

How to Value Bonds and Stocks

Net Present Value and Other Investment Rules

Net Present Value and Capital Budgeting

Risk Analysis,real Options,and Capital Budgeting

Risk and Return: Lessons From Market History

Risk and Return: the Capital Asset Pricing Model

An Alternative View of Risk and Return: the Arbitrage Pricing Theory

Risk,return,and Capital Budgeting

Corporate Financing Decisions and Efficient Capital Markets

Long-Term Financing: an Introduction

Capital Structure: Basic Concepts

Capital Structure: Limits to the Use of Debt

Valuation and Capital Budgeting for the Levered Firm

Dividends and Other Payouts

Issuing Equity Securities to the Public

Long-Term Debt

Leasing

Options and Corporate Finance: Basic Concepts

Options and Corporate Finance: Extensions and Applications

Warrants and Convertibles

Derivatives and Hedging Risk

Short-Term Finance and Planning

Cash Management

Credit Management

Mergers and Acquisitions

Financial Distress

International Corporate Finance

Filters

Exam 5: The Time Value of Money

An investment today of $3300 is worth $10,000 in 8 years.At what rate has your investment been growing (annually)over the 8 years?

What is the present value of 10 payments of $500 each received every 24 months at a discount rate of 12%?

An annuity factor:

A "little seven" accounting firm offers to pay you a year-end bonus of $5,000 for 3 years if you will accept employment with them and stay for the entire 3-year period.Which of the following amounts is closest to the present value of the bonus if the interest rate is 10%?

Your parents are giving you $100 a month for four years while you are in college.At a 6% discount rate,what are these payments worth to you when you first start college?

The equation [Ct/(1 + r)t] provides:

Introduction to Corporate Finance

Accounting Statements and Cash Flow

Financial Planning and Growth

Financial Markets and Net Present Value: First Principles of Finance

How to Value Bonds and Stocks

Net Present Value and Other Investment Rules

Net Present Value and Capital Budgeting

Risk Analysis,real Options,and Capital Budgeting

Risk and Return: Lessons From Market History

Risk and Return: the Capital Asset Pricing Model

An Alternative View of Risk and Return: the Arbitrage Pricing Theory

Risk,return,and Capital Budgeting

Corporate Financing Decisions and Efficient Capital Markets

Long-Term Financing: an Introduction

Capital Structure: Basic Concepts

Capital Structure: Limits to the Use of Debt

Valuation and Capital Budgeting for the Levered Firm

Dividends and Other Payouts

Issuing Equity Securities to the Public

Long-Term Debt

Leasing

Options and Corporate Finance: Basic Concepts

Options and Corporate Finance: Extensions and Applications

Warrants and Convertibles

Derivatives and Hedging Risk

Short-Term Finance and Planning

Cash Management

Credit Management

Mergers and Acquisitions

Financial Distress

International Corporate Finance

Filters

The equation [Ct/(1 + r)^t] provides: