Question 1

LeAnn wishes to know how much she should set aside now at 7% interest in order to accumulate a sum of $5,000 in four years.She should use a table for the:

Accepted Answer

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

Question 2

The more frequent the rate of compounding,the more interest that is earned on previous interest,resulting in a higher future value.

Accepted Answer

A) True 
 B)False  True

Question 3

If you put $200 into a savings account that pays annual compound interest of 8% per year and then withdraw the money two years later,you will earn interest of $32.

Accepted Answer

A) True 
 B)False  False

Question 4

An annuity is a series of equal cash payments over equal time intervals.

Accepted Answer

A) True 
 B)False

Question 5

If you put $300 into a savings account that pays annual compound interest of 10% per year and then withdraw the money two years later,you will earn interest of $63.

Accepted Answer

A) True 
 B)False

Question 6

Future value is how much an amount today will grow to be in the future.

Accepted Answer

A) True 
 B)False

Question 7

How much must be invested now at 9% interest to accumulate to $10,000 in five years?

Accepted Answer

A) $9,176. 
B) $6,499. 
C) $5,500. 
D) $5,960. 
A) $9,176. 
B) $6,499. 
C) $5,500. 
D) $5,960.

Question 8

Claudine Corporation will deposit $5,000 into a money market account at the end of each year for the next five years.How much will accumulate by the end of the fifth and final payment if the account earns 9% interest?

Accepted Answer

A) $32,617. 
B) $29,924. 
C) $27,250. 
D) $26,800. 
A) $32,617. 
B) $29,924. 
C) $27,250. 
D) $26,800.

Question 9

What is the value today of receiving five annual payments of $500,000,beginning one year from now,assuming an 11% discount rate?

Accepted Answer

A) $2,500,000. 
B) $2,225,000. 
C) $1,847,950. 
D) $2,115,270. 
A) $2,500,000. 
B) $2,225,000. 
C) $1,847,950. 
D) $2,115,270.

Question 10

The discount rate is the rate at which someone is willing to give up current dollars for future dollars.

Accepted Answer

A) True 
 B)False

Question 11

What is the value today of receiving $5,000 at the end of each year for the next 10 years,assuming an interest rate of 12% compounded annually?

Accepted Answer

A) $87,744. 
B) $28,251. 
C) $50,000. 
D) $15,529. 
A) $87,744. 
B) $28,251. 
C) $50,000. 
D) $15,529.

Question 12

George Jones is planning on a cruise for his 70th birthday party.He wants to know how much he should set aside at the end of each month at 6% interest to accumulate the sum of $4,800 in five years.He should use a table for the:

Accepted Answer

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

Question 13

Shane wants to invest money in a 6% CD that compounds semiannually.Shane would like the account to have a balance of $100,000 four years from now.How much must Shane deposit to accomplish his goal?

Accepted Answer

A) $88,848. 
B) $78,941. 
C) $25,336. 
D) $22,510. 
A) $88,848. 
B) $78,941. 
C) $25,336. 
D) $22,510.

Question 14

Simple interest is interest earned on the initial investment only.

Accepted Answer

A) True 
 B)False

Question 15

Baird Bros.Construction is considering the purchase of a machine at a cost of $125,000.The machine is expected to generate cash flows of $20,000 per year for ten years and can be sold at the end of ten years for $10,000.The discount rate is 10%.Assume the machine would be paid for on the first day of year one,but that all other cash flows occur at the end of the year.Ignore income tax considerations.Determine if Baird should purchase the machine.

Accepted Answer

Baird Bros

Question 16

The value that a series of equal payments will grow to in the future is referred to as the:

Accepted Answer

A) Future value of a single amount. 
B) Present value of a single amount. 
C) Future value of an annuity. 
D) Present value of an annuity. 
A) Future value of a single amount. 
B) Present value of a single amount. 
C) Future value of an annuity. 
D) Present value of an annuity.

Question 17

The value today of receiving a series of equal payments in the future is referred to as the:

Accepted Answer

A) Future value of a single amount. 
B) Present value of a single amount. 
C) Future value of an annuity. 
D) Present value of an annuity. 
A) Future value of a single amount. 
B) Present value of a single amount. 
C) Future value of an annuity. 
D) Present value of an annuity.

Question 18

The value today of receiving an amount in the future is referred to as the:

Accepted Answer

A) Future value of a single amount. 
B) Present value of a single amount. 
C) Future value of an annuity. 
D) Present value of an annuity. 
A) Future value of a single amount. 
B) Present value of a single amount. 
C) Future value of an annuity. 
D) Present value of an annuity.

Question 19

Bill wants to give Maria a $500,000 gift in seven years.If money is worth 6% compounded semiannually,what is Maria's gift worth today?

Accepted Answer

A) $66,110. 
B) $81,310. 
C) $406,550. 
D) $330,560. 
A) $66,110. 
B) $81,310. 
C) $406,550. 
D) $330,560.

Question 20

Anthony would like to have $18,000 to buy a new car in three years.Currently,he has saved $15,000.If he puts $15,000 in an account that earns 6% interest,compounded annually,will he be able to buy the car in three years?

Accepted Answer

The answer of Anthony would like to have $18,000 to...

LeAnn wishes to know how much she should set aside now at 7% interest in order to accumulate a sum of $5,000 in four years.She should use a table for the:

The more frequent the rate of compounding,the more interest that is earned on previous interest,resulting in a higher future value.

If you put $200 into a savings account that pays annual compound interest of 8% per year and then withdraw the money two years later,you will earn interest of $32.

An annuity is a series of equal cash payments over equal time intervals.

If you put $300 into a savings account that pays annual compound interest of 10% per year and then withdraw the money two years later,you will earn interest of $63.

Future value is how much an amount today will grow to be in the future.

How much must be invested now at 9% interest to accumulate to $10,000 in five years?

Claudine Corporation will deposit $5,000 into a money market account at the end of each year for the next five years.How much will accumulate by the end of the fifth and final payment if the account earns 9% interest?

What is the value today of receiving five annual payments of $500,000,beginning one year from now,assuming an 11% discount rate?

The discount rate is the rate at which someone is willing to give up current dollars for future dollars.

What is the value today of receiving $5,000 at the end of each year for the next 10 years,assuming an interest rate of 12% compounded annually?

George Jones is planning on a cruise for his 70th birthday party.He wants to know how much he should set aside at the end of each month at 6% interest to accumulate the sum of $4,800 in five years.He should use a table for the:

Shane wants to invest money in a 6% CD that compounds semiannually.Shane would like the account to have a balance of $100,000 four years from now.How much must Shane deposit to accomplish his goal?

Simple interest is interest earned on the initial investment only.

The value that a series of equal payments will grow to in the future is referred to as the:

The value today of receiving a series of equal payments in the future is referred to as the:

The value today of receiving an amount in the future is referred to as the:

Bill wants to give Maria a $500,000 gift in seven years.If money is worth 6% compounded semiannually,what is Maria's gift worth today?

Anthony would like to have $18,000 to buy a new car in three years.Currently,he has saved $15,000.If he puts $15,000 in an account that earns 6% interest,compounded annually,will he be able to buy the car in three years?

A Framework for Financial Accounting

The Accounting Cycle: During the Period

The Accounting Cycle: End of the Period

Cash and Internal Controls

Receivables and Sales

Inventory and Cost of Goods Sold

Long-Term Assets

Current Liabilities

Long-Term Liabilities

Stockholders Equity

Statement of Cash Flows

Financial Statement Analysis

Investments

International Financial Reporting Standards

Filters

Exam 13: Time Value of Money

LeAnn wishes to know how much she should set aside now at 7% interest in order to accumulate a sum of $5,000 in four years.She should use a table for the:

The more frequent the rate of compounding,the more interest that is earned on previous interest,resulting in a higher future value.

If you put $200 into a savings account that pays annual compound interest of 8% per year and then withdraw the money two years later,you will earn interest of $32.

An annuity is a series of equal cash payments over equal time intervals.

If you put $300 into a savings account that pays annual compound interest of 10% per year and then withdraw the money two years later,you will earn interest of $63.

Future value is how much an amount today will grow to be in the future.

How much must be invested now at 9% interest to accumulate to $10,000 in five years?

Claudine Corporation will deposit $5,000 into a money market account at the end of each year for the next five years.How much will accumulate by the end of the fifth and final payment if the account earns 9% interest?

What is the value today of receiving five annual payments of $500,000,beginning one year from now,assuming an 11% discount rate?

The discount rate is the rate at which someone is willing to give up current dollars for future dollars.

What is the value today of receiving $5,000 at the end of each year for the next 10 years,assuming an interest rate of 12% compounded annually?

George Jones is planning on a cruise for his 70th birthday party.He wants to know how much he should set aside at the end of each month at 6% interest to accumulate the sum of $4,800 in five years.He should use a table for the:

Shane wants to invest money in a 6% CD that compounds semiannually.Shane would like the account to have a balance of $100,000 four years from now.How much must Shane deposit to accomplish his goal?

Simple interest is interest earned on the initial investment only.

The value that a series of equal payments will grow to in the future is referred to as the:

The value today of receiving a series of equal payments in the future is referred to as the:

The value today of receiving an amount in the future is referred to as the:

Bill wants to give Maria a $500,000 gift in seven years.If money is worth 6% compounded semiannually,what is Maria's gift worth today?

Anthony would like to have $18,000 to buy a new car in three years.Currently,he has saved $15,000.If he puts $15,000 in an account that earns 6% interest,compounded annually,will he be able to buy the car in three years?

A Framework for Financial Accounting

The Accounting Cycle: During the Period

The Accounting Cycle: End of the Period

Cash and Internal Controls

Receivables and Sales

Inventory and Cost of Goods Sold

Long-Term Assets

Current Liabilities

Long-Term Liabilities

Stockholders Equity

Statement of Cash Flows

Financial Statement Analysis

Investments

International Financial Reporting Standards

Filters