Exam 5: Time Value of Money-The Basics

If you want to have $875 in 32 months,how much money must you put in a savings account today? Assume that the savings account pays 16% and it is compounded monthly (round to the nearest $10).

The annual percentage rate (APR)is calculated as which of the following?

A timeline typically represents cash flows as an exponential growth curve.

Which of the following formulas represents the future value of $500 invested at 8% compounded quarterly for five years?

Your bank has agreed to loan you $3,000 if you agree to pay a lump sum of $5,775 in five years.What annual rate of interest will you be paying?

Determining the specified amount of money that you will receive at the maturity of an investment is an example of a future value equation.

The future value of a single sum:

The end of one time period and the beginning of the next occupy the same place on a timeline.

Timelines used to visualize cash flows normally represent present values on the left and future values on the right.

A monthly credit card interest rate of 1.5% is equal to and effective annual rate of 19.56%

The future value of a lump sum deposited today increases as the number of years of compounding at a positive rate of interest declines.

At what rate must $400 be compounded annually for it to grow to $716.40 in 10 years?

Using a financial calculator,which of the following would be a correct way to find how long it would take for a sum to triple at a rate of 3%?

Use the following information to answer the following question(s). A Max,Inc.deposited $2,000 in a bank account that pays 12% interest annually. -What will the dollar amount be if the interest is compounded semiannually for those four years?

Stephen's grandmother deposited $100 in an investment account for him when he was born,25 years ago.The account is now worth $1,500.What was the average rate of return on the account? Which of the following is a correct way to solve this problem using EXCEL?

An investor will invest $1,000 now and expect to receive $10 for each of the next 10 years plus $1,000 at the end of the 10th year.Her cash at time period 10 is

If you invest $450 today and it increases to $6,185 at the end of 20 years,what rate of return have you earned?

If you put $700 in a savings account with a 10% nominal rate of interest compounded monthly,what will the investment be worth in 21 months (round to the nearest dollar)?

Assuming equal annual rates,the more frequent the compounding periods in a year,the higher the future value.

If you want to have $90 in four years,how much money must you put in a savings account today? Assume that the savings account pays 8.5% and it is compounded monthly (round to the nearest $1).