Question 1

What is the future value of $200 deposited today at eight percent interest compounded annually for three years?

Accepted Answer

A) $252 
B) $250 
C) $248 
D) $249 
A) $252 
B) $250 
C) $248 
D) $249

Question 2

The future value of today's $200 to be received 10 years later with an interest rate of 10 percent per annum is

Accepted Answer

A) $424. 
B) $484. 
C) $542. 
D) $519. 
A) $424. 
B) $484. 
C) $542. 
D) $519.

Question 3

The future value of $676 deposited at 5.85 percent compounded annually for five years is closest to

Accepted Answer

A) $845. 
B) $962. 
C) $907. 
D) $898. 
A) $845. 
B) $962. 
C) $907. 
D) $898.

Question 4

How much interest would Aleem save if he paid off his mortgage over 15 years instead of 30 years? His mortgage is $100 000 at six percent interest calculated semi-annually.

Accepted Answer

A) $64 111 
B) $107 069 
C) $58 297 
D) $62 959 
A) $64 111 
B) $107 069 
C) $58 297 
D) $62 959

Question 5

The higher the interest rate,the higher the future value interest factor,other things being equal.

Accepted Answer

A) True 
 B)False

Question 6

The longer the time period,the higher the present value interest factor,other things being equal.

Accepted Answer

A) True 
 B)False

Question 7

Raymond wants to save the college tuition fees his child will need in ten years by starting with a deposit of $6500 today and depositing another $500 at the end of each year.How much will Raymond have in ten years if he gets a rate of return of four percent?

Accepted Answer

A) $15 625 
B) $11 960 
C) $15 865 
D) $17 023 
A) $15 625 
B) $11 960 
C) $15 865 
D) $17 023

Question 8

Jessie won a lottery and was given the following choice.He could either take $5000 at the end of each month for 25 years,or a lump sum of $700 000.Assuming annual compounding at approximately what interest rate would he would be indifferent between the two choices?

Accepted Answer

A) 12.3 
B) 6)7 
C) 7)0 
D) 7)3 
A) 12.3 
B) 6)7 
C) 7)0 
D) 7)3

Question 9

If your credit card says 28% interest compounded daily,what is the effective interest rate?

Accepted Answer

A) 32.3% 
B) 29.8% 
C) 31.9% 
D) 28.9% 
A) 32.3% 
B) 29.8% 
C) 31.9% 
D) 28.9%

Question 10

Danny invests $124 090 in a fund and expects to receive $10 000 per year,at the end of each year,for the next 30 years.What is the approximate interest rate provided on the annuity?

Accepted Answer

A) 8 percent 
B) 6 percent 
C) 9 percent 
D) 7 percent 
A) 8 percent 
B) 6 percent 
C) 9 percent 
D) 7 percent

Question 11

The higher the interest rate,the lower the present value interest factor,other things being equal.

Accepted Answer

A) True 
 B)False

Question 12

Mortgages are annuities in that a fixed monthly payment is made to the lender (assume end of month payments and an interest rate that compounds semi-annually).Sara is planning to take on a mortgage of $100 000 and believes she can afford monthly payments up to $700.How much interest would she save if she decided to pay off her mortgage over 20 years,rather than over 25 years? Her mortgage is at five percent interest calculated semi-annually.

Accepted Answer

A) $42 000 
B) $18 120 
C) $34 896 
D) $16 776 
A) $42 000 
B) $18 120 
C) $34 896 
D) $16 776

Question 13

The rent charged for the use of money is called a dividend.

Accepted Answer

A) True 
 B)False

Question 14

If you borrow $20 000 as a five-year loan from the bank and the bank requires you to make end-of-year payments of $4878.05,what is the annual interest rate on this loan?

Accepted Answer

A) 8 percent 
B) 6 percent 
C) 7 percent 
D) 4 percent 
A) 8 percent 
B) 6 percent 
C) 7 percent 
D) 4 percent

Question 15

Ruby is expecting her first child next month and would like to have $80000 saved for university education when the child turns 17.If Ruby can get a 6.6 percent annual return on the education savings for her child,approximately how much does she need to start saving at the end of each month once the baby is born?

Accepted Answer

A) $2688 
B) $392 
C) $224 
D) $218 
A) $2688 
B) $392 
C) $224 
D) $218

Question 16

Betty wants to accumulate $1 million by the end of 20 years by making equal annual year-end deposits over the next 20 years.Assuming Betty can earn 10 percent over this period,how much must she deposit at the end of each year?

Accepted Answer

A) $18 560 
B) $22 480 
C) $27 760 
D) $17 460 
A) $18 560 
B) $22 480 
C) $27 760 
D) $17 460

Question 17

ABC Bank offers term deposits with 8 percent compounded annually,while XYZ Bank offers term deposits with 7.8 percent compounded monthly.ABC Bank offers a higher effective yield.

Accepted Answer

A) True 
 B)False

Question 18

The present value interest factor is

Accepted Answer

A) always less than 1.0. 
B) always more than 1.0. 
C) assumes simple interest. 
D) always between 1.0 to 2.0. 
A) always less than 1.0. 
B) always more than 1.0. 
C) assumes simple interest. 
D) always between 1.0 to 2.0.

Question 19

Assuming an inflationary economy,the future value interest factor is

Accepted Answer

A) always equal to 1.0. 
B) always less than 1.0. 
C) always greater than 1.0. 
D) always uncertain. 
A) always equal to 1.0. 
B) always less than 1.0. 
C) always greater than 1.0. 
D) always uncertain.

Question 20

What is the term for the interest rate financial institutions quote?

Accepted Answer

A) Nominal 
B) Effective 
C) Annual 
D) Real 
A) Nominal 
B) Effective 
C) Annual 
D) Real

What is the future value of $200 deposited today at eight percent interest compounded annually for three years?

The future value of today's $200 to be received 10 years later with an interest rate of 10 percent per annum is

The future value of $676 deposited at 5.85 percent compounded annually for five years is closest to

How much interest would Aleem save if he paid off his mortgage over 15 years instead of 30 years? His mortgage is $100 000 at six percent interest calculated semi-annually.

The higher the interest rate,the higher the future value interest factor,other things being equal.

The longer the time period,the higher the present value interest factor,other things being equal.

Raymond wants to save the college tuition fees his child will need in ten years by starting with a deposit of $6500 today and depositing another $500 at the end of each year.How much will Raymond have in ten years if he gets a rate of return of four percent?

Jessie won a lottery and was given the following choice.He could either take $5000 at the end of each month for 25 years,or a lump sum of $700 000.Assuming annual compounding at approximately what interest rate would he would be indifferent between the two choices?

If your credit card says 28% interest compounded daily,what is the effective interest rate?

Danny invests $124 090 in a fund and expects to receive $10 000 per year,at the end of each year,for the next 30 years.What is the approximate interest rate provided on the annuity?

The higher the interest rate,the lower the present value interest factor,other things being equal.

The rent charged for the use of money is called a dividend.

If you borrow $20 000 as a five-year loan from the bank and the bank requires you to make end-of-year payments of $4878.05,what is the annual interest rate on this loan?

Betty wants to accumulate $1 million by the end of 20 years by making equal annual year-end deposits over the next 20 years.Assuming Betty can earn 10 percent over this period,how much must she deposit at the end of each year?

ABC Bank offers term deposits with 8 percent compounded annually,while XYZ Bank offers term deposits with 7.8 percent compounded monthly.ABC Bank offers a higher effective yield.

The present value interest factor is

Assuming an inflationary economy,the future value interest factor is

What is the term for the interest rate financial institutions quote?

Tools for Financial Planning - Planning with Personal Financial Statements

Tools for Financial Planning - Using Tax Concepts for Planning

Managing Your Financial Resources - Banking Services and Managing Your Money

Managing Your Financial Resources - Assessing,Managing and Securing Your Credit

Managing Your Financial Resources - Purchasing and Financing a Home

Protecting Your Wealth - Auto and Homeowner's Insurance

Protecting Your Wealth - Health and Life Insurance

Personal Investing - Investing Fundamentals

Personal Investing - Investing in Stocks

Personal Investing - Investing in Bonds

Personal Investing - Investing in Mutual Funds

Retirement and Estate Planning - Retirement Planning

Retirement and Estate Planning - Estate Planning

Synthesis of Financial Planning - Integrating the Components of a Financial Plan

Filters

Exam 1: Tools for Financial Planning - Applying Time Value Concepts

What is the future value of $200 deposited today at eight percent interest compounded annually for three years?

The future value of today's $200 to be received 10 years later with an interest rate of 10 percent per annum is

The future value of $676 deposited at 5.85 percent compounded annually for five years is closest to

How much interest would Aleem save if he paid off his mortgage over 15 years instead of 30 years? His mortgage is $100 000 at six percent interest calculated semi-annually.

The higher the interest rate,the higher the future value interest factor,other things being equal.

The longer the time period,the higher the present value interest factor,other things being equal.

Raymond wants to save the college tuition fees his child will need in ten years by starting with a deposit of $6500 today and depositing another $500 at the end of each year.How much will Raymond have in ten years if he gets a rate of return of four percent?

Jessie won a lottery and was given the following choice.He could either take $5000 at the end of each month for 25 years,or a lump sum of $700 000.Assuming annual compounding at approximately what interest rate would he would be indifferent between the two choices?

If your credit card says 28% interest compounded daily,what is the effective interest rate?

Danny invests $124 090 in a fund and expects to receive $10 000 per year,at the end of each year,for the next 30 years.What is the approximate interest rate provided on the annuity?

The higher the interest rate,the lower the present value interest factor,other things being equal.

The rent charged for the use of money is called a dividend.

If you borrow $20 000 as a five-year loan from the bank and the bank requires you to make end-of-year payments of $4878.05,what is the annual interest rate on this loan?

Betty wants to accumulate $1 million by the end of 20 years by making equal annual year-end deposits over the next 20 years.Assuming Betty can earn 10 percent over this period,how much must she deposit at the end of each year?

ABC Bank offers term deposits with 8 percent compounded annually,while XYZ Bank offers term deposits with 7.8 percent compounded monthly.ABC Bank offers a higher effective yield.

The present value interest factor is

Assuming an inflationary economy,the future value interest factor is

What is the term for the interest rate financial institutions quote?

Tools for Financial Planning - Planning with Personal Financial Statements

Tools for Financial Planning - Using Tax Concepts for Planning

Managing Your Financial Resources - Banking Services and Managing Your Money

Managing Your Financial Resources - Assessing,Managing and Securing Your Credit

Managing Your Financial Resources - Purchasing and Financing a Home

Protecting Your Wealth - Auto and Homeowner's Insurance

Protecting Your Wealth - Health and Life Insurance

Personal Investing - Investing Fundamentals

Personal Investing - Investing in Stocks

Personal Investing - Investing in Bonds

Personal Investing - Investing in Mutual Funds

Retirement and Estate Planning - Retirement Planning

Retirement and Estate Planning - Estate Planning

Synthesis of Financial Planning - Integrating the Components of a Financial Plan

Filters