Question 1

It is not realistic for a 20-year-old to accumulate $1 million by the age of 65.

Accepted Answer

A) True 
 B)False

Question 2

Using the Rule of 72,if it will take approximately 12 years for your money to double,at what annually compounded interest rate is it invested?

Accepted Answer

A) 6% 
B) 8% 
C) 9% 
D) 12% 
A) 6% 
B) 8% 
C) 9% 
D) 12%

Question 3

If Monica invests $15,750 at 8 percent annual interest,how much would she have after eight years?

Accepted Answer

A) $29,152.15 
B) $17,010.08 
C) $32,354.22 
D) $39,678.92 
A) $29,152.15 
B) $17,010.08 
C) $32,354.22 
D) $39,678.92

Question 4

A dollar received in the future is worth more than a dollar received today.

Accepted Answer

A) True 
 B)False

Question 5

A method by which one can compare cash flows across time-either as what a future cash flow is worth today (present value)or what an investment made today will be worth in the future (future value)-is called

Accepted Answer

A) time-value of money. 
B) compounding. 
C) simple interest. 
D) opportunity cost. 
A) time-value of money. 
B) compounding. 
C) simple interest. 
D) opportunity cost.

Question 6

Approximately how long will it take Enrique's investment to grow into $2,000?

Accepted Answer

A) Seventy-two months 
B) Six years 
C) Nine years 
D) Twelve years 
A) Seventy-two months 
B) Six years 
C) Nine years 
D) Twelve years

Question 7

Assume that Adrian will need $30,000 for his 20 percent down payment in five years.If he locates an investment with a 9 percent rate of return that compounds annually,which of the following is closest to the amount that he will have to save each year?

Accepted Answer

A) $6,003 
B) $4,884 
C) $5,187 
D) $5,013 
A) $6,003 
B) $4,884 
C) $5,187 
D) $5,013

Question 8

What are some practical uses of present and future values?

Accepted Answer

There are basically two practical uses f

Question 9

What is the annual interest rate earned on a deposit that grew from $60 to $111.06 over the last 8 years?

Accepted Answer

A) 14% 
B) 12% 
C) 8% 
D) 6% 
A) 14% 
B) 12% 
C) 8% 
D) 6%

Question 10

Using the Rule of 72,approximately how long will it take to double your money if you invest it at 8% compounded annually?

Accepted Answer

A) 6 months 
B) 9 months 
C) 6 years 
D) 9 years 
E) It depends on the amount of the initial investment. 
A) 6 months 
B) 9 months 
C) 6 years 
D) 9 years 
E) It depends on the amount of the initial investment.

Question 11

Most people achieve comfortable retirements by postponing saving until after age 50,when they are able to save a large amount on a regular basis.

Accepted Answer

A) True 
 B)False

Question 12

The discount rate is the interest rate used to bring ________ back to ________.

Accepted Answer

A) current dollars;present dollars 
B) future dollars;present dollars 
C) current interest rate;present present interest rate 
D) future interest rate;present interest rate 
A) current dollars;present dollars 
B) future dollars;present dollars 
C) current interest rate;present present interest rate 
D) future interest rate;present interest rate

Question 13

A series of equal dollar payments at the end of each period for "x" number of time periods is

Accepted Answer

A) an annuity. 
B) a complex annuity. 
C) an annuity due. 
D) a deferred annuity. 
E) an equal installment annuity. 
A) an annuity. 
B) a complex annuity. 
C) an annuity due. 
D) a deferred annuity. 
E) an equal installment annuity.

Question 14

What is the maximum that you would be willing to loan your brother for a $100 IOU if he promises to pay you back at the end of the year? You want to earn an annual rate of return of 12%.

Accepted Answer

A) $82.00 
B) $89.29 
C) $92.73 
D) $88.00 
A) $82.00 
B) $89.29 
C) $92.73 
D) $88.00

Question 15

Alexis is ready to buy her house.She will purchase the $450,000 house with her $75,000 down payment and finance the rest with a 20 year,6% annual rate mortgage with equal end of month payments.What will be her monthly payment?

Accepted Answer

A) $2,134.76 
B) $3,223.94 
C) $1,701.69 
D) $2,686.62 
A) $2,134.76 
B) $3,223.94 
C) $1,701.69 
D) $2,686.62

Question 16

If his savings account earns a more aggressive 14 percent annual rate of return,Enrique's savings will be worth approximately ________ more by age 68.

Accepted Answer

A) $4,145 
B) $245,473 
C) $498,596 
D) $538,807 
A) $4,145 
B) $245,473 
C) $498,596 
D) $538,807

Question 17

What is the present value of a $1,000 payment at the end of each of the next 10 years discounted back to the present at 5%?

Accepted Answer

A) $5,098 
B) $7,722 
C) $8,775 
D) $9,112 
A) $5,098 
B) $7,722 
C) $8,775 
D) $9,112

Question 18

List four reasons why you should care about the power of compounding and the time value of money.

Accepted Answer

The concepts are critical to your effort

Question 19

You have just placed $500 in a bank account that earns an annual rate of return of 6%.How much will you have in that bank account after 6 years?

Accepted Answer

A) $652.48 
B) $709.26 
C) $787.66 
D) $758.66 
E) $801.68 
A) $652.48 
B) $709.26 
C) $787.66 
D) $758.66 
E) $801.68

Question 20

Suppose that you want to purchase some land to build a homestead in the future.You can afford payments of $5,000 each year and want to pay the loan back over the next 20 years.Assuming no down payment is required,how much can you borrow if the bank will charge you an annual interest rate of 12%?

Accepted Answer

A) $100,985.45 
B) $48,231.47 
C) $37,347.22 
D) $160,262.21 
A) $100,985.45 
B) $48,231.47 
C) $37,347.22 
D) $160,262.21

It is not realistic for a 20-year-old to accumulate $1 million by the age of 65.

Using the Rule of 72,if it will take approximately 12 years for your money to double,at what annually compounded interest rate is it invested?

If Monica invests $15,750 at 8 percent annual interest,how much would she have after eight years?

A dollar received in the future is worth more than a dollar received today.

A method by which one can compare cash flows across time-either as what a future cash flow is worth today (present value)or what an investment made today will be worth in the future (future value)-is called

Approximately how long will it take Enrique's investment to grow into $2,000?

Assume that Adrian will need $30,000 for his 20 percent down payment in five years.If he locates an investment with a 9 percent rate of return that compounds annually,which of the following is closest to the amount that he will have to save each year?

What are some practical uses of present and future values?

What is the annual interest rate earned on a deposit that grew from $60 to $111.06 over the last 8 years?

Using the Rule of 72,approximately how long will it take to double your money if you invest it at 8% compounded annually?

Most people achieve comfortable retirements by postponing saving until after age 50,when they are able to save a large amount on a regular basis.

The discount rate is the interest rate used to bring back to .

A series of equal dollar payments at the end of each period for "x" number of time periods is

What is the maximum that you would be willing to loan your brother for a $100 IOU if he promises to pay you back at the end of the year? You want to earn an annual rate of return of 12%.

Alexis is ready to buy her house.She will purchase the $450,000 house with her $75,000 down payment and finance the rest with a 20 year,6% annual rate mortgage with equal end of month payments.What will be her monthly payment?

If his savings account earns a more aggressive 14 percent annual rate of return,Enrique's savings will be worth approximately ________ more by age 68.

What is the present value of a $1,000 payment at the end of each of the next 10 years discounted back to the present at 5%?

List four reasons why you should care about the power of compounding and the time value of money.

You have just placed $500 in a bank account that earns an annual rate of return of 6%.How much will you have in that bank account after 6 years?

Suppose that you want to purchase some land to build a homestead in the future.You can afford payments of $5,000 each year and want to pay the loan back over the next 20 years.Assuming no down payment is required,how much can you borrow if the bank will charge you an annual interest rate of 12%?

The Financial Planning Process

Measuring Your Financial Health and Making a Plan

Tax Planning and Strategies

Cash or Liquid Asset Management

Using Credit Cards: the Role of Open Credit

Student and Consumer Loans: the Role of Planned Borrowing

The Home and Automobile Decision

Life and Health Insurance

Property and Liability Insurance

Investment Basics

Investing in Stocks

Investing in Bonds and Other Alternatives

Mutual Funds: an Easy Way to Diversify

Retirement Planning

Estate Planning: Saving Your Heirs Money and Headaches

Financial Life Eventsfitting the Pieces Together

Filters

Exam 3: Understanding and Appreciating the Time Value of Money

It is not realistic for a 20-year-old to accumulate $1 million by the age of 65.

Using the Rule of 72,if it will take approximately 12 years for your money to double,at what annually compounded interest rate is it invested?

If Monica invests $15,750 at 8 percent annual interest,how much would she have after eight years?

A dollar received in the future is worth more than a dollar received today.

A method by which one can compare cash flows across time-either as what a future cash flow is worth today (present value)or what an investment made today will be worth in the future (future value)-is called

Approximately how long will it take Enrique's investment to grow into $2,000?

Assume that Adrian will need $30,000 for his 20 percent down payment in five years.If he locates an investment with a 9 percent rate of return that compounds annually,which of the following is closest to the amount that he will have to save each year?

What are some practical uses of present and future values?

What is the annual interest rate earned on a deposit that grew from $60 to $111.06 over the last 8 years?

Using the Rule of 72,approximately how long will it take to double your money if you invest it at 8% compounded annually?

Most people achieve comfortable retirements by postponing saving until after age 50,when they are able to save a large amount on a regular basis.

The discount rate is the interest rate used to bring ________ back to ________.

A series of equal dollar payments at the end of each period for "x" number of time periods is

What is the maximum that you would be willing to loan your brother for a $100 IOU if he promises to pay you back at the end of the year? You want to earn an annual rate of return of 12%.

Alexis is ready to buy her house.She will purchase the $450,000 house with her $75,000 down payment and finance the rest with a 20 year,6% annual rate mortgage with equal end of month payments.What will be her monthly payment?

If his savings account earns a more aggressive 14 percent annual rate of return,Enrique's savings will be worth approximately ________ more by age 68.

What is the present value of a $1,000 payment at the end of each of the next 10 years discounted back to the present at 5%?

List four reasons why you should care about the power of compounding and the time value of money.

You have just placed $500 in a bank account that earns an annual rate of return of 6%.How much will you have in that bank account after 6 years?

Suppose that you want to purchase some land to build a homestead in the future.You can afford payments of $5,000 each year and want to pay the loan back over the next 20 years.Assuming no down payment is required,how much can you borrow if the bank will charge you an annual interest rate of 12%?

The Financial Planning Process

Measuring Your Financial Health and Making a Plan

Tax Planning and Strategies

Cash or Liquid Asset Management

Using Credit Cards: the Role of Open Credit

Student and Consumer Loans: the Role of Planned Borrowing

The Home and Automobile Decision

Life and Health Insurance

Property and Liability Insurance

Investment Basics

Investing in Stocks

Investing in Bonds and Other Alternatives

Mutual Funds: an Easy Way to Diversify

Retirement Planning

Estate Planning: Saving Your Heirs Money and Headaches

Financial Life Eventsfitting the Pieces Together

Filters

The discount rate is the interest rate used to bring back to .