Question 1

Sandra has a savings account that is now $50,000.She started with $28,225 and earned interest at 10% compounded annually.It took five years to accumulate the $50,000.

Accepted Answer

A) True 
 B)False

Question 2

A company borrows money from the bank by promising to make eight semiannual payments of $9,000 each.How much is the company able to borrow if the interest rate is 10% compounded semiannually?

Accepted Answer

$9,000 x 6

Question 3

Interest is:

Accepted Answer

A)  Time. 
B)  A borrower's payment to the owner of an asset for its use. 
C)  The same as a savings account. 
D)  Always a liability. 
E)  Always an asset. 
A)  Time. 
B)  A borrower's payment to the owner of an asset for its use. 
C)  The same as a savings account. 
D)  Always a liability. 
E)  Always an asset.

Question 4

A company is considering an investment that will return $20,000 at the end of each semiannual period for four years.If the company requires an annual return of 10%,what is the maximum amount it is willing to pay for this investment?

Accepted Answer

A)  Not more than $63,398 
B)  Not more than $126,796 
C)  Not more than $80,000 
D)  Not more than $129,264 
E)  Not more than $160,000 
A)  Not more than $63,398 
B)  Not more than $126,796 
C)  Not more than $80,000 
D)  Not more than $129,264 
E)  Not more than $160,000

Question 5

Explain the concept of the present value of a single amount.

Accepted Answer

The present value of a single

Question 6

Annette has a loan that requires a $25,000 payment at the end of three years.The interest rate on the loan is 5%,compounded annually.How much did Annette borrow today?

Accepted Answer

$25,000 x

Question 7

What is interest?

Accepted Answer

Interest represents

Question 8

Sam has a loan that requires a single payment of $4,000 at the end of three years.The loan's interest rate is 6%,compounded semiannually.How much did Sam borrow?

Accepted Answer

A)  $3,358.40 
B)  $4,000.00 
C)  $3,660.40 
D)  $4,776.40 
E)  $3,350.00 
A)  $3,358.40 
B)  $4,000.00 
C)  $3,660.40 
D)  $4,776.40 
E)  $3,350.00

Question 9

Jon Shear expects an investment of $25,000 to return $6,595 annually.His investment is earning 10% per year.How many annual payments will he receive?

Accepted Answer

A)  Five payments 
B)  Six payments 
C)  Four payments 
D)  Three payments 
E)  More than six payments 
A)  Five payments 
B)  Six payments 
C)  Four payments 
D)  Three payments 
E)  More than six payments

Question 10

The future value of $100 compounded semiannually for three years at 12% equals $140.49.

Accepted Answer

A) True 
 B)False

Question 11

A company is setting up a sinking fund to pay off $8,654,000 in bonds that are due in seven years.The fund will earn 7% interest,and the company intends to put away a series of equal year-end amounts for seven years.What amount must the company deposit annually?

Accepted Answer

$8,654,000

Question 12

The present value of 1 formula is often useful when a borrowed asset must be repaid in full at a later date and the borrower wants to know its worth at the future date.

Accepted Answer

A) True 
 B)False

Question 13

Daley Co.lends $524,210 to Davis Corporation.The terms of the loan require that Davis repay the loan with six semiannual period-end payments of $100,000 each.What semiannual interest rate is Davis paying on the loan?

Accepted Answer

$524,210/$100,000 = 5.2421
Thi

Question 14

Explain the concept of the future value of an annuity.

Accepted Answer

The future value of an annuity

Question 15

What amount can you borrow if you make six quarterly payments of $4,000 at a 12 % annual rate of interest?

Accepted Answer

A)  $24,838.00 
B)  $21,668.80 
C)  $31,049.00 
D)  $40,000.00 
E)  $44,800,00 
A)  $24,838.00 
B)  $21,668.80 
C)  $31,049.00 
D)  $40,000.00 
E)  $44,800,00

Question 16

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

Accepted Answer

The answer of An _____________ is a series of equal...

Question 17

A company borrows money from the bank by promising to make six annual year-end payments of $25,000 each.How much is the company able to borrow if the interest rate is 9%?

Accepted Answer

$25,000 x

Question 18

Interest is the borrower's payment to the owner of an asset for its use.

Accepted Answer

A) True 
 B)False

Exam 26: Time Value of Money

Sandra has a savings account that is now $50,000.She started with $28,225 and earned interest at 10% compounded annually.It took five years to accumulate the $50,000.

A company borrows money from the bank by promising to make eight semiannual payments of $9,000 each.How much is the company able to borrow if the interest rate is 10% compounded semiannually?

Interest is:

A company is considering an investment that will return $20,000 at the end of each semiannual period for four years.If the company requires an annual return of 10%,what is the maximum amount it is willing to pay for this investment?

Explain the concept of the present value of a single amount.

Annette has a loan that requires a $25,000 payment at the end of three years.The interest rate on the loan is 5%,compounded annually.How much did Annette borrow today?

What is interest?

Sam has a loan that requires a single payment of $4,000 at the end of three years.The loan's interest rate is 6%,compounded semiannually.How much did Sam borrow?

Jon Shear expects an investment of $25,000 to return $6,595 annually.His investment is earning 10% per year.How many annual payments will he receive?

The future value of $100 compounded semiannually for three years at 12% equals $140.49.

A company is setting up a sinking fund to pay off $8,654,000 in bonds that are due in seven years.The fund will earn 7% interest,and the company intends to put away a series of equal year-end amounts for seven years.What amount must the company deposit annually?

The present value of 1 formula is often useful when a borrowed asset must be repaid in full at a later date and the borrower wants to know its worth at the future date.

Daley Co.lends $524,210 to Davis Corporation.The terms of the loan require that Davis repay the loan with six semiannual period-end payments of $100,000 each.What semiannual interest rate is Davis paying on the loan?

Explain the concept of the future value of an annuity.

What amount can you borrow if you make six quarterly payments of $4,000 at a 12 % annual rate of interest?

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

A company borrows money from the bank by promising to make six annual year-end payments of $25,000 each.How much is the company able to borrow if the interest rate is 9%?

Interest is the borrower's payment to the owner of an asset for its use.

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

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