Question 1

The rate of interest is usually expressed as an annual rate.

Accepted Answer

A) True 
 B)False

Question 2

Compounding interest assumes the interest on an investment is reinvested.

Accepted Answer

A) True 
 B)False

Question 3

The future amount of an annuity is calculated by multiplying the present value of the annuity by its applicable factor from a table.

Accepted Answer

A) True 
 B)False

Question 4

Your wealthy aunt wishes to give you a trip to Paris when you graduate from college in three years.She estimates the trip will cost $4,000.How much must she invest now at 4% to accumulate enough for you to take this trip?

Accepted Answer

A) $3,287.72. 
B) $3,556.00. 
C) $4,499.44. 
D) $3,161.24. 
A) $3,287.72. 
B) $3,556.00. 
C) $4,499.44. 
D) $3,161.24.

Question 5

To determine the present value of a single amount to be received or paid at a future time you need to know all of the following except:

Accepted Answer

A) The interest rate or discount rate. 
B) The number of periods. 
C) The future value. 
D) The time between periods. 
A) The interest rate or discount rate. 
B) The number of periods. 
C) The future value. 
D) The time between periods.

Question 6

Use the tables to determine the answers to the following:
(1)How much must be invested now for 5 periods at 6% to amount to $15,000?
(2)How much is $3,000 invested now at 8% in 8 periods worth?
(3)How much is $25,000 compounded quarterly at 12% for 4 years?

Accepted Answer

(1)$11,208

Question 7

To determine the amount to be deposited in a bank today to grow to $5,000 three years from now at 7% which table should be used?

Accepted Answer

A) Present value of 1. 
B) Future value of 1. 
C) Present value of an annuity. 
D) No table is required,just multiply $5,000 by 1.07. 
A) Present value of 1. 
B) Future value of 1. 
C) Present value of an annuity. 
D) No table is required,just multiply $5,000 by 1.07.

Question 8

Future value is the amount that must be invested today at a specific interest rate to receive a particular amount at some future date.

Accepted Answer

A) True 
 B)False

Question 9

Anthony Driver wants to buy a new car in 4 years.He knows that he can earn 6% interest compounded semi-annually.How much must he deposit now in order to have $26,000 at the end of 4 years?

Accepted Answer

A) $21,390.20. 
B) $20,524.66. 
C) $38,413.96. 
D) $31.603.26. 
A) $21,390.20. 
B) $20,524.66. 
C) $38,413.96. 
D) $31.603.26.

Question 10

The future value of an investment gradually increases toward the present amount.

Accepted Answer

A) True 
 B)False

The rate of interest is usually expressed as an annual rate.

Compounding interest assumes the interest on an investment is reinvested.

The future amount of an annuity is calculated by multiplying the present value of the annuity by its applicable factor from a table.

Your wealthy aunt wishes to give you a trip to Paris when you graduate from college in three years.She estimates the trip will cost $4,000.How much must she invest now at 4% to accumulate enough for you to take this trip?

To determine the present value of a single amount to be received or paid at a future time you need to know all of the following except:

Use the tables to determine the answers to the following: (1)How much must be invested now for 5 periods at 6% to amount to $15,000? (2)How much is $3,000 invested now at 8% in 8 periods worth? (3)How much is $25,000 compounded quarterly at 12% for 4 years?

To determine the amount to be deposited in a bank today to grow to $5,000 three years from now at 7% which table should be used?

Future value is the amount that must be invested today at a specific interest rate to receive a particular amount at some future date.

Anthony Driver wants to buy a new car in 4 years.He knows that he can earn 6% interest compounded semi-annually.How much must he deposit now in order to have $26,000 at the end of 4 years?

The future value of an investment gradually increases toward the present amount.

Accounting: Information for Decision Making

Basic Financial Statements

The Accounting Cycle: Capturing Economic Events

The Accounting Cycle: Accruals and Deferrals

The Accounting Cycle: Reporting Financial Results

Merchandising Activities

Financial Assets

Inventories and the Cost of Goods Sold

Plant and Intangible Assets

Liabilities

Stockholders Equity: Paid-In Capital

Income and Changes in Retained Earnings

Statement of Cash Flows

Financial Statement Analysis

Global Business and Accounting

Management Accounting: a Business Partner

Job Order Cost Systems and Overhead Allocations

Process Costing

Costing and the Value Chain

Cost-Volume-Profit Analysis

Incremental Analysis

Responsibility Accounting and Transfer Pricing

Operational Budgeting

Standard Cost Systems

Rewarding Business Performance

Capital Budgeting

Forms of Business Organization

Filters

Exam 28: The Time Value of Money: Future Amounts and Present Values

The rate of interest is usually expressed as an annual rate.

Compounding interest assumes the interest on an investment is reinvested.

The future amount of an annuity is calculated by multiplying the present value of the annuity by its applicable factor from a table.

Your wealthy aunt wishes to give you a trip to Paris when you graduate from college in three years.She estimates the trip will cost $4,000.How much must she invest now at 4% to accumulate enough for you to take this trip?

To determine the present value of a single amount to be received or paid at a future time you need to know all of the following except:

Use the tables to determine the answers to the following: (1)How much must be invested now for 5 periods at 6% to amount to $15,000? (2)How much is $3,000 invested now at 8% in 8 periods worth? (3)How much is $25,000 compounded quarterly at 12% for 4 years?

To determine the amount to be deposited in a bank today to grow to $5,000 three years from now at 7% which table should be used?

Future value is the amount that must be invested today at a specific interest rate to receive a particular amount at some future date.

Anthony Driver wants to buy a new car in 4 years.He knows that he can earn 6% interest compounded semi-annually.How much must he deposit now in order to have $26,000 at the end of 4 years?

The future value of an investment gradually increases toward the present amount.

Accounting: Information for Decision Making

Basic Financial Statements

The Accounting Cycle: Capturing Economic Events

The Accounting Cycle: Accruals and Deferrals

The Accounting Cycle: Reporting Financial Results

Merchandising Activities

Financial Assets

Inventories and the Cost of Goods Sold

Plant and Intangible Assets

Liabilities

Stockholders Equity: Paid-In Capital

Income and Changes in Retained Earnings

Statement of Cash Flows

Financial Statement Analysis

Global Business and Accounting

Management Accounting: a Business Partner

Job Order Cost Systems and Overhead Allocations

Process Costing

Costing and the Value Chain

Cost-Volume-Profit Analysis

Incremental Analysis

Responsibility Accounting and Transfer Pricing

Operational Budgeting

Standard Cost Systems

Rewarding Business Performance

Capital Budgeting

Forms of Business Organization

Filters