Question 1

Column 2 is an interest table for the:

Accepted Answer

A) Present value of an ordinary annuity of 1. 
B) Future value of an ordinary annuity of 1. 
C) Present value of an annuity due of 1. 
D) Future value of an annuity due of 1. 
A) Present value of an ordinary annuity of 1. 
B) Future value of an ordinary annuity of 1. 
C) Present value of an annuity due of 1. 
D) Future value of an annuity due of 1.

Question 2

An investment product promises to pay $42,000 at the end of 10 years.If an investor feels this investment should produce a rate of return of 12%,compounded annually,what's the most the investor should be willing to pay for the investment?

Accepted Answer

A) $ 15,146. 
B) $ 13,523. 
C) $ 42,000. 
D) $130,446. 
A) $ 15,146. 
B) $ 13,523. 
C) $ 42,000. 
D) $130,446.

Question 3

On May 1,2016,Bo Smith,proud father of newborn son Bobo,purchased $200,000 in zero-coupon bonds that mature on May 1,2036.The bonds pay no interest during the period of time they are outstanding.The interest rate for such borrowings is at 9%.Interest compounds annually.
Required: Calculate the price Bo paid for the bonds.

Accepted Answer

$200,000 x 0.17843*

Question 4

Listed below are 5 terms followed by a list of phrases that describe or characterize each of the terms.Match each phrase with the number for the correct term.

Accepted Answer

The answer of Listed below are 5 terms followed by...

Question 5

GHI Company will issue $2,000,000 in 8%,10-year bonds when the market rate of interest is 6%.Interest is paid semiannually.
Required: Determine how much cash GHI Company should realize from the bond issue.

Accepted Answer

$2,000,000

Question 6

Listed below are 5 terms followed by a list of phrases that describe or characterize each of the terms.Match each phrase with the number for the correct term.

Accepted Answer

The answer of Listed below are 5 terms followed by...

Question 7

ABC Company will issue $5,000,000 in 6%,10-year bonds when the market rate of interest is 8%.Interest is paid semiannually.
Required: Determine how much cash ABC Company will realize from the bond issue.

Accepted Answer

$5,000,000

Question 8

Garland Inc.offers a new employee a lump-sum signing bonus at the date of employment,June 1,2016.Alternatively,the employee can take $39,000 at the date of employment plus $10,000 each June 1 for five years,beginning in 2020.Assuming the employee's time value of money is 9% annually,what lump sum at employment date would make him indifferent between the two options?

Accepted Answer

A) $44,035. 
B) $40,855. 
C) $69,035. 
D) $65,855. 
A) $44,035. 
B) $40,855. 
C) $69,035. 
D) $65,855.

Question 9

Briefly describe the differences between an ordinary annuity,an annuity due,and a deferred annuity.

Accepted Answer

An annuity is a series of equal cash flo

Question 10

To determine the future value factor for an annuity due for period n when given tables only for an ordinary annuity:

Accepted Answer

A) Obtain the FVA factor for n + 1 and deduct 1. 
B) Obtain the FVA factor for n and deduct 1. 
C) Obtain the FVA factor for n - 1 and add 1. 
D) Obtain the FVA factor for n + 1 and add 1. 
A) Obtain the FVA factor for n + 1 and deduct 1. 
B) Obtain the FVA factor for n and deduct 1. 
C) Obtain the FVA factor for n - 1 and add 1. 
D) Obtain the FVA factor for n + 1 and add 1.

Question 11

Prepare a time diagram for the future value of an ordinary annuity with three payments of $300.Be sure to indicate the periods in which interest is added.

Accepted Answer

TIME DIAGRAM FOR THE

Question 12

Provide two examples of the use of present value techniques in accounting.

Accepted Answer

This question asks for only two examples

Question 13

When interest is compounded,the stated rate of interest exceeds the effective rate of interest.

Accepted Answer

A) True 
 B)False

Question 14

Use the following to answer questions 
Present and future value tables of $1 at 3% are presented below:
  
-Jose wants to cash in his winning lottery ticket.He can either receive five $5,000 annual payments starting today,or he can receive a lump-sum payment now based on a 3% annual interest rate.What would be the lump-sum payment?

Accepted Answer

A) $23,586. 
B) $22,899. 
C) $21,565. 
D) $23,000. 
A) $23,586. 
B) $22,899. 
C) $21,565. 
D) $23,000.

Question 15

Fenland Co.plans to retire $100 million in bonds in five years,so it wishes to create a fund by making equal investments at the beginning of each year during that period in an account it expects to earn 8% annually.What amount does Fenland need to invest each year?

Accepted Answer

A) $15,783,077. 
B) $17,045,650. 
C) $23,190,400. 
D) Cannot be determined from the given information. 
A) $15,783,077. 
B) $17,045,650. 
C) $23,190,400. 
D) Cannot be determined from the given information.

Question 16

On February 1,2016,Lynda Brown,proud mother of newborn daughter Goldie,purchased $600,000 in zero-coupon bonds that mature on February 1,2036.The bonds pay no interest during the period of time they are outstanding.The interest rate for such borrowings is at 12%.
Required: Calculate the price Lynda paid for the bonds.

Accepted Answer

$600,000 x 0.10367*

Question 17

Column 3 is an interest table for the:

Accepted Answer

A) Present value of 1. 
B) Future value of 1. 
C) Present value of an ordinary annuity of 1. 
D) Present value of an annuity due of 1. 
A) Present value of 1. 
B) Future value of 1. 
C) Present value of an ordinary annuity of 1. 
D) Present value of an annuity due of 1.

Question 18

Use the following to answer questions 
Present and future value tables of $1 at 3% are presented below:
  
-At the end of the next four years,a new machine is expected to generate net cash flows of $8,000,$12,000,$10,000,and $15,000,respectively.What are the (rounded)cash flows worth today if a 3% interest rate properly reflects the time value of money in this situation?

Accepted Answer

A) $41,556. 
B) $39,982. 
C) $32,400. 
D) $38,100. 
A) $41,556. 
B) $39,982. 
C) $32,400. 
D) $38,100.

Question 19

Given identical current amounts owed and identical interest rates,annual payments of an ordinary annuity will be greater than annual payments of an annuity due.

Accepted Answer

A) True 
 B)False

Question 20

With an ordinary annuity,a payment is made or received on the date the agreement begins.

Accepted Answer

A) True 
 B)False

Column 2 is an interest table for the:

An investment product promises to pay $42,000 at the end of 10 years.If an investor feels this investment should produce a rate of return of 12%,compounded annually,what's the most the investor should be willing to pay for the investment?

Listed below are 5 terms followed by a list of phrases that describe or characterize each of the terms.Match each phrase with the number for the correct term.

GHI Company will issue $2,000,000 in 8%,10-year bonds when the market rate of interest is 6%.Interest is paid semiannually. Required: Determine how much cash GHI Company should realize from the bond issue.

Listed below are 5 terms followed by a list of phrases that describe or characterize each of the terms.Match each phrase with the number for the correct term.

ABC Company will issue $5,000,000 in 6%,10-year bonds when the market rate of interest is 8%.Interest is paid semiannually. Required: Determine how much cash ABC Company will realize from the bond issue.

Briefly describe the differences between an ordinary annuity,an annuity due,and a deferred annuity.

To determine the future value factor for an annuity due for period n when given tables only for an ordinary annuity:

Prepare a time diagram for the future value of an ordinary annuity with three payments of $300.Be sure to indicate the periods in which interest is added.

Provide two examples of the use of present value techniques in accounting.

When interest is compounded,the stated rate of interest exceeds the effective rate of interest.

Fenland Co.plans to retire $100 million in bonds in five years,so it wishes to create a fund by making equal investments at the beginning of each year during that period in an account it expects to earn 8% annually.What amount does Fenland need to invest each year?

Column 3 is an interest table for the:

Given identical current amounts owed and identical interest rates,annual payments of an ordinary annuity will be greater than annual payments of an annuity due.

With an ordinary annuity,a payment is made or received on the date the agreement begins.

Environment and Theoretical Structure of Financial Accounting

Review of the Accounting Process

The Balance Sheet and Financial Disclosures

The Income Statement, comprehensive Income, and the Statement of Cash Flows

Income Measurement

Cash and Receivables

Inventories: Measurement

Inventories: Additional Issues

Property, plant, and Equipment and Intangible Assets: Acquisition and Disposition

Property, plant, and Equipment and Intangible Assets: Utilization and Impairment

Investments

Current Liabilities and Contingencies

Bonds and Long-Term Notes

Leases

Accounting for Income Taxes

Pensions and Other Postretirement Benefits

Shareholders Equity

Share-Based Compensation and Earnings Per Share

Accounting Changes

The Statement of Cash Flows

Filters

Exam 6: Time Value of Money Concepts

Column 2 is an interest table for the:

An investment product promises to pay $42,000 at the end of 10 years.If an investor feels this investment should produce a rate of return of 12%,compounded annually,what's the most the investor should be willing to pay for the investment?

Listed below are 5 terms followed by a list of phrases that describe or characterize each of the terms.Match each phrase with the number for the correct term.

GHI Company will issue $2,000,000 in 8%,10-year bonds when the market rate of interest is 6%.Interest is paid semiannually. Required: Determine how much cash GHI Company should realize from the bond issue.

Listed below are 5 terms followed by a list of phrases that describe or characterize each of the terms.Match each phrase with the number for the correct term.

ABC Company will issue $5,000,000 in 6%,10-year bonds when the market rate of interest is 8%.Interest is paid semiannually. Required: Determine how much cash ABC Company will realize from the bond issue.

Briefly describe the differences between an ordinary annuity,an annuity due,and a deferred annuity.

To determine the future value factor for an annuity due for period n when given tables only for an ordinary annuity:

Prepare a time diagram for the future value of an ordinary annuity with three payments of $300.Be sure to indicate the periods in which interest is added.

Provide two examples of the use of present value techniques in accounting.

When interest is compounded,the stated rate of interest exceeds the effective rate of interest.

Fenland Co.plans to retire $100 million in bonds in five years,so it wishes to create a fund by making equal investments at the beginning of each year during that period in an account it expects to earn 8% annually.What amount does Fenland need to invest each year?

Column 3 is an interest table for the:

Given identical current amounts owed and identical interest rates,annual payments of an ordinary annuity will be greater than annual payments of an annuity due.

With an ordinary annuity,a payment is made or received on the date the agreement begins.

Environment and Theoretical Structure of Financial Accounting

Review of the Accounting Process

The Balance Sheet and Financial Disclosures

The Income Statement, comprehensive Income, and the Statement of Cash Flows

Income Measurement

Cash and Receivables

Inventories: Measurement

Inventories: Additional Issues

Property, plant, and Equipment and Intangible Assets: Acquisition and Disposition

Property, plant, and Equipment and Intangible Assets: Utilization and Impairment

Investments

Current Liabilities and Contingencies

Bonds and Long-Term Notes

Leases

Accounting for Income Taxes

Pensions and Other Postretirement Benefits

Shareholders Equity

Share-Based Compensation and Earnings Per Share

Accounting Changes

The Statement of Cash Flows

Filters