Question 1

What is the value today of receiving $3,000 at the end of each year for the next three years,assuming an interest rate of 3% compounded annually?

Accepted Answer

A) $8,486. 
B) $8,251. 
C) $9,000. 
D) $9,273. 
A) $8,486. 
B) $8,251. 
C) $9,000. 
D) $9,273.

Question 2

How much will $1,000 invested at the end of each year grow to in 20 years,assuming an interest rate of 10% compounded annually?

Accepted Answer

A) $6,728. 
B) $8,514. 
C) $83,159. 
D) $57,275. 
A) $6,728. 
B) $8,514. 
C) $83,159. 
D) $57,275.

Question 3

Price Mart is considering outsourcing its billing operations.A consultant estimates that outsourcing should result in after-tax cash savings of $9,000 the first year,$15,000 for the next two years,and $18,000 for the next two years.Assuming a 12% discount rate,calculate the total present value of the cash flows.

Accepted Answer

The answer of Price Mart is considering outsourcing its billing...

Question 4

Which three factors are necessary in calculating the present value of a single amount?

Accepted Answer

You need to know (1)the future

Question 5

At the end of each quarter,Patti deposits $500 into an account that pays 12% interest compounded quarterly.How much will Patti have in the account in three years?

Accepted Answer

A) $7,096. 
B) $7,013. 
C) $7,129. 
D) $8,880. 
A) $7,096. 
B) $7,013. 
C) $7,129. 
D) $8,880.

Question 6

Present value indicates how much a present amount of money will grow to in the future.

Accepted Answer

A) True 
 B)False

Question 7

Explain the difference between present value and future value.

Accepted Answer

Present value tells us the value today o

Question 8

Quaker State Inc.offers a new employee a lump-sum signing bonus at the date of employment.Alternatively,the employee can take $8,000 at the date of employment plus $20,000 at the end of each of his first three years of service.Assuming the employee's time value of money is 10% annually,what lump-sum at employment date would make him indifferent between the two options?

Accepted Answer

A) $23,026. 
B) $57,737. 
C) $62,711. 
D) None of the above is correct. 
A) $23,026. 
B) $57,737. 
C) $62,711. 
D) None of the above is correct.

Question 9

Briefly explain why the value of $100 received today is greater than the value of $100 received one year from now.

Accepted Answer

The $100 received today can be invested

Question 10

Two banks each have stated CD rates of 12%.Bank A compounds quarterly and Bank B compounds semiannually.Explain which bank offers the better CD.

Accepted Answer

The yield on a CD increases with more fr

Question 11

The time value of money is a concept,which means that the value of $1 increases over time.

Accepted Answer

A) True 
 B)False

Question 12

The concept that interest causes the value of money received today to be greater than the value of that same amount of money received in the future is referred to as the:

Accepted Answer

A) Monetary unit assumption. 
B) Historical cost principle. 
C) Time value of money. 
D) Matching principle. 
A) Monetary unit assumption. 
B) Historical cost principle. 
C) Time value of money. 
D) Matching principle.

Question 13

How much will $25,000 grow to in seven years,assuming an interest rate of 12% compounded annually?

Accepted Answer

A) $55,267. 
B) $46,000. 
C) $61,899. 
D) $52,344. 
A) $55,267. 
B) $46,000. 
C) $61,899. 
D) $52,344.

Question 14

Below are excerpts from interest tables for 8% interest.
Column 1 is an interest 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 15

Sandra won $5,000,000 in the state lottery,which she has elected to receive at the end of each month over the next thirty years.She will receive 7% interest on unpaid amounts.To determine the amount of her monthly check,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.

Question 16

Monica wants to sell her share of an investment to Barney for $50,000 in three years.If money is worth 6% compounded semiannually,what would Monica accept today?

Accepted Answer

A) $8,375. 
B) $41,874. 
C) $11,941. 
D) $41,000. 
A) $8,375. 
B) $41,874. 
C) $11,941. 
D) $41,000.

Question 17

Compute the future value of the following invested amounts at the specified periods and interest rates.

Accepted Answer

a.$43,178;

Question 18

Zulu Corporation hires a new chief executive officer and promises to pay her a signing bonus of $2 million per year for 10 years,starting at the end of the first year.The value of this signing bonus is:

Accepted Answer

A) The present value of the annuity. 
B) The future value of the annuity. 
C) $20 million. 
D) $0 because no cash is owed immediately. 
A) The present value of the annuity. 
B) The future value of the annuity. 
C) $20 million. 
D) $0 because no cash is owed immediately.

Question 19

A series of equal periodic payments is referred to as:

Accepted Answer

A) The time value of money. 
B) An annuity. 
C) The future value. 
D) Interest. 
A) The time value of money. 
B) An annuity. 
C) The future value. 
D) Interest.

Question 20

How much will $8,000 grow to in five years,assuming an interest rate of 8% compounded quarterly?

Accepted Answer

A) $10,989. 
B) $11,755. 
C) $11,888. 
D) $12,013. 
A) $10,989. 
B) $11,755. 
C) $11,888. 
D) $12,013.

What is the value today of receiving $3,000 at the end of each year for the next three years,assuming an interest rate of 3% compounded annually?

How much will $1,000 invested at the end of each year grow to in 20 years,assuming an interest rate of 10% compounded annually?

Which three factors are necessary in calculating the present value of a single amount?

At the end of each quarter,Patti deposits $500 into an account that pays 12% interest compounded quarterly.How much will Patti have in the account in three years?

Present value indicates how much a present amount of money will grow to in the future.

Explain the difference between present value and future value.

Briefly explain why the value of $100 received today is greater than the value of $100 received one year from now.

Two banks each have stated CD rates of 12%.Bank A compounds quarterly and Bank B compounds semiannually.Explain which bank offers the better CD.

The time value of money is a concept,which means that the value of $1 increases over time.

The concept that interest causes the value of money received today to be greater than the value of that same amount of money received in the future is referred to as the:

How much will $25,000 grow to in seven years,assuming an interest rate of 12% compounded annually?

Below are excerpts from interest tables for 8% interest. Column 1 is an interest table for the:

Sandra won $5,000,000 in the state lottery,which she has elected to receive at the end of each month over the next thirty years.She will receive 7% interest on unpaid amounts.To determine the amount of her monthly check,she should use a table for the:

Monica wants to sell her share of an investment to Barney for $50,000 in three years.If money is worth 6% compounded semiannually,what would Monica accept today?

Compute the future value of the following invested amounts at the specified periods and interest rates.

Zulu Corporation hires a new chief executive officer and promises to pay her a signing bonus of $2 million per year for 10 years,starting at the end of the first year.The value of this signing bonus is:

A series of equal periodic payments is referred to as:

How much will $8,000 grow to in five years,assuming an interest rate of 8% compounded quarterly?

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

What is the value today of receiving $3,000 at the end of each year for the next three years,assuming an interest rate of 3% compounded annually?

How much will $1,000 invested at the end of each year grow to in 20 years,assuming an interest rate of 10% compounded annually?

Which three factors are necessary in calculating the present value of a single amount?

At the end of each quarter,Patti deposits $500 into an account that pays 12% interest compounded quarterly.How much will Patti have in the account in three years?

Present value indicates how much a present amount of money will grow to in the future.

Explain the difference between present value and future value.

Briefly explain why the value of $100 received today is greater than the value of $100 received one year from now.

Two banks each have stated CD rates of 12%.Bank A compounds quarterly and Bank B compounds semiannually.Explain which bank offers the better CD.

The time value of money is a concept,which means that the value of $1 increases over time.

The concept that interest causes the value of money received today to be greater than the value of that same amount of money received in the future is referred to as the:

How much will $25,000 grow to in seven years,assuming an interest rate of 12% compounded annually?

Below are excerpts from interest tables for 8% interest. Column 1 is an interest table for the:

Sandra won $5,000,000 in the state lottery,which she has elected to receive at the end of each month over the next thirty years.She will receive 7% interest on unpaid amounts.To determine the amount of her monthly check,she should use a table for the:

Monica wants to sell her share of an investment to Barney for $50,000 in three years.If money is worth 6% compounded semiannually,what would Monica accept today?

Compute the future value of the following invested amounts at the specified periods and interest rates.

Zulu Corporation hires a new chief executive officer and promises to pay her a signing bonus of $2 million per year for 10 years,starting at the end of the first year.The value of this signing bonus is:

A series of equal periodic payments is referred to as:

How much will $8,000 grow to in five years,assuming an interest rate of 8% compounded quarterly?

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