Question 1

How much must you invest today at 10% interest in order to see your investment grow to $5,000 in 3 years?

Accepted Answer

A)  $3,050 
B)  $3,555 
C)  $7,105 
D)  $3,755 
A)  $3,050 
B)  $3,555 
C)  $7,105 
D)  $3,755

Question 2

Compounding more than once a year (semiannually, quarterly, or monthly) will increase the interest rate and number of periods used in the calculations.

Accepted Answer

A) True 
 B)False

Question 3

If you were to put $1,000 in the bank at 6% interest each year for the next 10 years, how much would you have as an ending balance in your account?

Accepted Answer

A)  $6,975 
B)  $15,937 
C)  $7,716 
D)  $13,181 
A)  $6,975 
B)  $15,937 
C)  $7,716 
D)  $13,181

Question 4

When adjusting for semiannual compounding of an annuity, the adjustments include multiplying the periods and annuity payment amount by 2.

Accepted Answer

A) True 
 B)False

Question 5

A dollar today is worth more than a dollar to be received in the future because

Accepted Answer

A)  a stated rate of return is guaranteed on all investment opportunities. 
B)  the dollar can be invested today and earn interest. 
C)  inflation will increase the purchasing power of a future dollar. 
D)  None of these options are true. 
A)  a stated rate of return is guaranteed on all investment opportunities. 
B)  the dollar can be invested today and earn interest. 
C)  inflation will increase the purchasing power of a future dollar. 
D)  None of these options are true.

How much must you invest today at 10% interest in order to see your investment grow to $5,000 in 3 years?

Compounding more than once a year (semiannually, quarterly, or monthly) will increase the interest rate and number of periods used in the calculations.

If you were to put $1,000 in the bank at 6% interest each year for the next 10 years, how much would you have as an ending balance in your account?

When adjusting for semiannual compounding of an annuity, the adjustments include multiplying the periods and annuity payment amount by 2.

A dollar today is worth more than a dollar to be received in the future because

The Goals and Activities of Financial Management

Review of Accounting

Financial Analysis

Financial Forecasting

Operating and Financial Leverage

Working Capital and the Financing Decision

Current Asset Management

Sources of Short-Term Financing

Valuation and Rates of Return

Cost of Capital

The Capital Budgeting Decision

Risk and Capital Budgeting

Capital Markets

Investment Banking: Public and Private Placement

Long-Term Debt and Lease Financing

Common and Preferred Stock Financing

Dividend Policy and Retained Earnings

Convertibles, Warrants, and Derivatives

External Growth Through Mergers

International Financial Management

Filters

Exam 9: The Time Value of Money

How much must you invest today at 10% interest in order to see your investment grow to $5,000 in 3 years?

Compounding more than once a year (semiannually, quarterly, or monthly) will increase the interest rate and number of periods used in the calculations.

If you were to put $1,000 in the bank at 6% interest each year for the next 10 years, how much would you have as an ending balance in your account?

When adjusting for semiannual compounding of an annuity, the adjustments include multiplying the periods and annuity payment amount by 2.

A dollar today is worth more than a dollar to be received in the future because

The Goals and Activities of Financial Management

Review of Accounting

Financial Analysis

Financial Forecasting

Operating and Financial Leverage

Working Capital and the Financing Decision

Current Asset Management

Sources of Short-Term Financing

Valuation and Rates of Return

Cost of Capital

The Capital Budgeting Decision

Risk and Capital Budgeting

Capital Markets

Investment Banking: Public and Private Placement

Long-Term Debt and Lease Financing

Common and Preferred Stock Financing

Dividend Policy and Retained Earnings

Convertibles, Warrants, and Derivatives

External Growth Through Mergers

International Financial Management

Filters