Question 1

The present value of an annuity is the value now of a series of future receipts or payments, discounted assuming compound interest.

Accepted Answer

A) True 
 B)False

Question 2

Which table has a factor of 1.00000 for 1 period at every interest rate?

Accepted Answer

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

Question 3

The amount you must deposit now in your savings account, paying 6% interest, in order to accumulate $6,000 for a down payment 5 years from now on a new car is

Accepted Answer

A)  $1,200. 
B)  $4,484. 
C)  $4,477. 
D)  $4,200.

Question 4

A $10,000, 6%, 5-year note payable that pays interest quarterly would be discounted back to its present value by using tables that would indicate which one of the following period-interest combinations?

Accepted Answer

A)  5 interest periods, 6% interest 
B)  20 interest periods, 6% interest 
C)  20 interest periods, 1.5% interest 
D)  5 interest periods, 1.5% interest

Question 5

Suzy Douglas has been offered the opportunity of investing $73,540 now. The investment will earn 8% per year and at the end of its life will return $200,000 to Suzy. How many years must Suzy wait to receive the $200,000?

Accepted Answer

A)  10 
B)  11 
C)  12 
D)  13

Question 6

Match the items below by entering the appropriate code letter in the space provided.
A. Compound interest D. Present value of a single amount
B. Future value of a single amount E. Present value of an annuity
C. Future value of an annuity
_____ 1. The value today of a future amount to be received or paid.
_____ 2. The value at a future date of a given amount invested.
_____ 3. Return on principal plus interest for two or more periods.
_____ 4. Value today of a series of future amounts to be received or paid.
_____ 5. The sum of all the payments or receipts plus the accumulated compound interest on them.

Accepted Answer

The answer of Match the items below by entering the...

Question 7

Mandy How plans to buy an automobile and can deposit $3,000 toward the purchase today. If the annual interest rate is 8%, how much can Mandy expect to have as a down payment in 3 years?

Accepted Answer

The answer of Mandy How plans to buy an automobile...

Question 8

Amy Brown plans to buy a surround sound stereo system for $1,100 after 3 years. If the interest rate is 6%, how much money should Amy set aside today for the purchase?

Accepted Answer

The answer of Amy Brown plans to buy a surround...

Question 9

The process of determining the present value is referred to as _________________ the future amount.

Accepted Answer

The answer of The process of determining the present value...

Question 10

The factor 1.0609 is taken from the 3% column and 2 periods row in a certain table. From what table is this factor taken?

Accepted Answer

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

Question 11

Compound interest is computed on the principal and any interest earned that has not been paid or received.

Accepted Answer

A) True 
 B)False

Question 12

In present value calculations, the process of determining the present value is called

Accepted Answer

A)  allocating. 
B)  pricing. 
C)  negotiating. 
D)  discounting.

Question 13

Present value is based on

Accepted Answer

A)  the dollar amount to be received. 
B)  the length of time until the amount is received. 
C)  the interest rate. 
D)  All of these answers are correct.

Question 14

Peter Johnson invests $35,516.80 now for a series of $5,000 annual returns beginning one year from now. Peter will earn 10% on the initial investment. How many annual payments will Peter receive?

Accepted Answer

A)  10 
B)  12 
C)  13 
D)  15

Question 15

Lamb Company deposited $15,000 annually for 6 years in an account paying 5% interest compounded annually. What is the balance of the account at the end of the 6th year?

Accepted Answer

The answer of Lamb Company deposited $15,000 annually for 6...

Question 16

The ______________ of a long-term note or bond is a function of three variables.

Accepted Answer

The answer of The ______________ of a long-term note or...

Question 17

If $30,000 is deposited in a savings account at the end of each year and the account pays interest of 5% compounded annually, what will be the balance of the account at the end of 10 years?

Accepted Answer

A)  $48,867 
B)  $315,000 
C)  $377,337 
D)  $450,000

Question 18

The amount you must deposit now in your savings account, paying 5% interest, in order to accumulate $10,000 for your first tuition payment when you start college in 3 years is

Accepted Answer

A)  $8,500. 
B)  $7,830. 
C)  $8,638. 
D)  $8,860.

Question 19

DMV leases a building for 20 years. The lease requires 20 annual payments of $12,000 each, with the first payment due immediately. The interest rate in the lease is 10%. What is the present value of the cost of leasing the building?

Accepted Answer

The answer of DMV leases a building for 20 years....

Question 20

In computing the present value of an annuity, it is not necessary to know the number of discount periods.

Accepted Answer

A) True 
 B)False

Exam 14: Specimen Financial Statements: Apple Inc

The present value of an annuity is the value now of a series of future receipts or payments, discounted assuming compound interest.

Which table has a factor of 1.00000 for 1 period at every interest rate?

The amount you must deposit now in your savings account, paying 6% interest, in order to accumulate $6,000 for a down payment 5 years from now on a new car is

A $10,000, 6%, 5-year note payable that pays interest quarterly would be discounted back to its present value by using tables that would indicate which one of the following period-interest combinations?

Suzy Douglas has been offered the opportunity of investing $73,540 now. The investment will earn 8% per year and at the end of its life will return $200,000 to Suzy. How many years must Suzy wait to receive the $200,000?

Mandy How plans to buy an automobile and can deposit $3,000 toward the purchase today. If the annual interest rate is 8%, how much can Mandy expect to have as a down payment in 3 years?

Amy Brown plans to buy a surround sound stereo system for $1,100 after 3 years. If the interest rate is 6%, how much money should Amy set aside today for the purchase?

The process of determining the present value is referred to as _________________ the future amount.

The factor 1.0609 is taken from the 3% column and 2 periods row in a certain table. From what table is this factor taken?

Compound interest is computed on the principal and any interest earned that has not been paid or received.

In present value calculations, the process of determining the present value is called

Present value is based on

Peter Johnson invests $35,516.80 now for a series of $5,000 annual returns beginning one year from now. Peter will earn 10% on the initial investment. How many annual payments will Peter receive?

Lamb Company deposited $15,000 annually for 6 years in an account paying 5% interest compounded annually. What is the balance of the account at the end of the 6th year?

The ______________ of a long-term note or bond is a function of three variables.

If $30,000 is deposited in a savings account at the end of each year and the account pays interest of 5% compounded annually, what will be the balance of the account at the end of 10 years?

The amount you must deposit now in your savings account, paying 5% interest, in order to accumulate $10,000 for your first tuition payment when you start college in 3 years is

DMV leases a building for 20 years. The lease requires 20 annual payments of $12,000 each, with the first payment due immediately. The interest rate in the lease is 10%. What is the present value of the cost of leasing the building?

In computing the present value of an annuity, it is not necessary to know the number of discount periods.