Exam 26: Time Value of Money

Explore all topics

A company is considering investing in a project that is expected to return $350,000 four years from now.How much is the company willing to pay for this investment if the company requires a 12% return?

(Multiple Choice)

4.7/5

(42)

Question 21

From the perspective of a depositor,a savings account is a liability with interest.

(True/False)

4.8/5

(39)

Question 22

The interest rate is also called the __________________ rate.

(Short Answer)

4.8/5

(30)

Question 23

When you reach retirement age,you will have one fund of $100,000 from which you are going to make annual withdrawals of $14,702.The fund will earn 6% per year.For how many years will you be able to draw an even amount of $14,702?

(Short Answer)

4.8/5

(30)

Question 24

Future value can be found if the interest rate (i),the number of periods (n),and the present value (p)are known.

(True/False)

4.8/5

(33)

Question 25

Keisha has $3,500 now and plans on investing it in a fund that will pay her 12% interest compounded quarterly.How much will Keisha have accumulated after two years?

(Multiple Choice)

4.8/5

(49)

Question 26

You hope to retire in 10 years.Regrettably you are only just now beginning to save money for this purpose.You expect to save $6,000 a year at an annual rate of 8%.How much will you have accumulated when you retire?

(Short Answer)

4.7/5

(38)

Question 27

The present value of $5,000 per year for three years at 12% compounded annually is $12,009.

(True/False)

4.8/5

(36)

Question 28

In a present value or future value table,the length of one time period may be one year,one month,or any other length of time depending on the situation.

(True/False)

4.8/5

(35)

Question 29

The number of periods in a future value calculation can only be expressed in years.

(True/False)

4.8/5

(25)

Question 30

Chad is setting up a retirement fund,and he plans on depositing $5,000 per year in an investment that will pay 7% annual interest.How long will it take him to reach his retirement goal of $69,080?

(Multiple Choice)

4.9/5

(40)

Question 31

Explain the concept of the present value of an annuity.

(Essay)

4.9/5

(39)

Question 32

Crowe Company has acquired a building with a loan that requires payments of $20,000 every six months for five years.The annual interest rate on the loan is 12%.What is the present value of the building?

(Multiple Choice)

4.9/5

(35)

Question 33

An annuity is a series of equal payments occurring at equal intervals.

(True/False)

4.9/5

(39)

Question 34

A company has $50,000 today to invest in a fund that will earn 7%.How much will the fund contain at the end of eight years?

(Short Answer)

4.8/5

(38)

Question 35

Big League Sports borrowed $883,212 and must make annual year-end payments of $120,000 each.If the applicable interest rate is 6%,how many years will it take Big League Sports to pay off the loan?

(Essay)

4.9/5

(34)

Question 36

What interest rate is required to accumulate $6,802.50 in four years from an investment of $5,000?

(Multiple Choice)

4.9/5

(28)

Question 37

The present value factor for determining the present value of a single sum to be received three years from today at 10% interest compounded semiannually is 0.7462.

(True/False)

4.9/5

(43)

Question 38

A company is beginning a savings plan.It will save $15,000 per year for the next 10 years.How much will the company have accumulated after the tenth year-end deposit,assuming the fund earns 10% interest?

(Short Answer)

4.8/5

(48)

Question 39

A company expects to invest $5,000 today at 12% annual interest and plans to receive $15,529 at the end of the investment period.How many years will elapse before the company accumulates the $15,529?

(Multiple Choice)

4.8/5

(43)

Question 40

Showing 21 - 40 of 58

Exam 26: Time Value of Money

A company is considering investing in a project that is expected to return $350,000 four years from now.How much is the company willing to pay for this investment if the company requires a 12% return?

From the perspective of a depositor,a savings account is a liability with interest.

The interest rate is also called the __________________ rate.

When you reach retirement age,you will have one fund of $100,000 from which you are going to make annual withdrawals of $14,702.The fund will earn 6% per year.For how many years will you be able to draw an even amount of $14,702?

Future value can be found if the interest rate (i),the number of periods (n),and the present value (p)are known.

Keisha has $3,500 now and plans on investing it in a fund that will pay her 12% interest compounded quarterly.How much will Keisha have accumulated after two years?

You hope to retire in 10 years.Regrettably you are only just now beginning to save money for this purpose.You expect to save $6,000 a year at an annual rate of 8%.How much will you have accumulated when you retire?

The present value of $5,000 per year for three years at 12% compounded annually is $12,009.

In a present value or future value table,the length of one time period may be one year,one month,or any other length of time depending on the situation.

The number of periods in a future value calculation can only be expressed in years.

Chad is setting up a retirement fund,and he plans on depositing $5,000 per year in an investment that will pay 7% annual interest.How long will it take him to reach his retirement goal of $69,080?

Explain the concept of the present value of an annuity.

Crowe Company has acquired a building with a loan that requires payments of $20,000 every six months for five years.The annual interest rate on the loan is 12%.What is the present value of the building?

An annuity is a series of equal payments occurring at equal intervals.

A company has $50,000 today to invest in a fund that will earn 7%.How much will the fund contain at the end of eight years?

Big League Sports borrowed $883,212 and must make annual year-end payments of $120,000 each.If the applicable interest rate is 6%,how many years will it take Big League Sports to pay off the loan?

What interest rate is required to accumulate $6,802.50 in four years from an investment of $5,000?

The present value factor for determining the present value of a single sum to be received three years from today at 10% interest compounded semiannually is 0.7462.

A company is beginning a savings plan.It will save $15,000 per year for the next 10 years.How much will the company have accumulated after the tenth year-end deposit,assuming the fund earns 10% interest?

A company expects to invest $5,000 today at 12% annual interest and plans to receive $15,529 at the end of the investment period.How many years will elapse before the company accumulates the $15,529?

Introducing Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts and Preparing Financial Statements

Accounting for Merchandising Operations

Inventories and Cost of Sales

Cash and Internal Controls

Accounts and Notes Receivable

Long-Term Assets

Current Liabilities

Long-Term Liabilities

Corporate Reporting and Analysis

Reporting Cash Flows

Analysis of Financial Statements

Managerial Accounting Concepts and Principles

Job Order Costing and Analysis

Process Costing

Activity-Based Costing and Analysis

Cost-Volume-Profit Analysis

Variable Costing and Performance Reporting

Master Budgets and Performance Planning

Flexible Budgets and Standard Costs

Decentralization and Performance Measurement

Relevant Costing for Managerial Decisions

Capital Budgeting and Investment Analysis

Accounting With Special Journals

Investments and International Operations

Accounting for Partnerships

Filters