Question 1

Suppose the interest rate is 6% and compounded annually.What is the present discounted value of 6 monthly payments of $150?

Accepted Answer

A)  $855.00 
B)  $877.50 
C)  $884.46 
D)  $900.00 
A)  $855.00 
B)  $877.50 
C)  $884.46 
D)  $900.00

Question 2

-Refer to Figure 10.1.Suppose the individual is initially at point b.Based on the figure,the individual is relatively ______ and will ultimately move to point _____.

Accepted Answer

A)  Impatient; c 
B)  Impatient; b 
C)  Patient; c 
D)  Patient; b 
A)  Impatient; c 
B)  Impatient; b 
C)  Patient; c 
D)  Patient; b

Question 3

-Table 10.1 shows the cash flows and discounted cash flows for three mutually exclusive projects available to a company.Assume an interest rate of 5%.Which project has the highest NPV?

Accepted Answer

A)  Project A 
B)  Project B 
C)  Project C 
D)  Cannot be determined 
A)  Project A 
B)  Project B 
C)  Project C 
D)  Cannot be determined

Question 4

Suppose you lend $2,500 at 11.5% for 3 years.If the interest is compounded annually,how much interest will you receive in those 3 years?

Accepted Answer

A)  $862.50 
B)  $965.49 
C)  $3,362.50 
D)  $2,465.49 
A)  $862.50 
B)  $965.49 
C)  $3,362.50 
D)  $2,465.49

Question 5

What is another term for time value of money?

Accepted Answer

A)  Net present value 
B)  Internal rate of return 
C)  Opportunity cost of funds 
D)  Yield to maturity 
A)  Net present value 
B)  Internal rate of return 
C)  Opportunity cost of funds 
D)  Yield to maturity

Question 6

The amount of money borrowed in a transaction is called

Accepted Answer

A)  Interest 
B)  Principal 
C)  Internal rate of return 
D)  Present discounted value 
A)  Interest 
B)  Principal 
C)  Internal rate of return 
D)  Present discounted value

Question 7

Suppose you borrow $1,000 at 8% for 2 years.If the interest is compounded annually,how much money will you owe at the end of those 2 years?

Accepted Answer

A)  $1,080.00 
B)  $1,160.00 
C)  $1,166.40 
D)  $1,345.60 
A)  $1,080.00 
B)  $1,160.00 
C)  $1,166.40 
D)  $1,345.60

Suppose the interest rate is 6% and compounded annually.What is the present discounted value of 6 monthly payments of $150?

-Refer to Figure 10.1.Suppose the individual is initially at point b.Based on the figure,the individual is relatively __ and will ultimately move to point _.

-Table 10.1 shows the cash flows and discounted cash flows for three mutually exclusive projects available to a company.Assume an interest rate of 5%.Which project has the highest NPV?

Suppose you lend $2,500 at 11.5% for 3 years.If the interest is compounded annually,how much interest will you receive in those 3 years?

What is another term for time value of money?

The amount of money borrowed in a transaction is called

Suppose you borrow $1,000 at 8% for 2 years.If the interest is compounded annually,how much money will you owe at the end of those 2 years?

Introduction

Supply and Demand3

Balancing Benefits and Costs

Principles and Preferences

Constraints, Choices, and Demand

Rom Demand to Welfare

Technology and Production

Cost

Rofit Maximization

Choices Involving Risk

Choices Involving Strategy

Behavioral Economics

Equilibrium and Efficiency

Market Intervention

General Equilibrium, Efficiency, and Equity

Monopoly

Pricing Policies

Oligopoly

Externalities and Public Goods

Filters

Exam 10: Choices Involving Time

Suppose the interest rate is 6% and compounded annually.What is the present discounted value of 6 monthly payments of $150?

-Refer to Figure 10.1.Suppose the individual is initially at point b.Based on the figure,the individual is relatively ______ and will ultimately move to point _____.

-Table 10.1 shows the cash flows and discounted cash flows for three mutually exclusive projects available to a company.Assume an interest rate of 5%.Which project has the highest NPV?

Suppose you lend $2,500 at 11.5% for 3 years.If the interest is compounded annually,how much interest will you receive in those 3 years?

What is another term for time value of money?

The amount of money borrowed in a transaction is called

Suppose you borrow $1,000 at 8% for 2 years.If the interest is compounded annually,how much money will you owe at the end of those 2 years?

Introduction

Supply and Demand3

Balancing Benefits and Costs

Principles and Preferences

Constraints, Choices, and Demand

Rom Demand to Welfare

Technology and Production

Cost

Rofit Maximization

Choices Involving Risk

Choices Involving Strategy

Behavioral Economics

Equilibrium and Efficiency

Market Intervention

General Equilibrium, Efficiency, and Equity

Monopoly

Pricing Policies

Oligopoly

Externalities and Public Goods

Filters

-Refer to Figure 10.1.Suppose the individual is initially at point b.Based on the figure,the individual is relatively __ and will ultimately move to point _.