Question 1

Keisha has $3,500 now and plans on investing it in a fund that will pay her 12% interest compounded quarterly. How much will Keisha have accumulated after 2 years? (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.)

Accepted Answer

A)  $4,340.00 
B)  $3,920.00 
C)  $4,433.80 
D)  $3,500.00 
E)  $4,390.40

Question 2

Kelsey has a loan that requires a $25,000 lump sum payment at the end of three years. The interest rate on the loan is 5%, compounded annually. How much did Kelsey borrow today?

Accepted Answer

The answer of Kelsey has a loan that requires a...

Question 3

A company is setting aside $21,354 today, and wishes to have $30,000 at the end of three years for a down payment on a piece of property. What interest rate must the company earn?

Accepted Answer

The answer of A company is setting aside $21,354 today,...

Question 4

What amount can you borrow if you make seven semiannual payments of $4,000 at an 8% annual rate of interest? (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.)

Accepted Answer

A)  $25,760.00 
B)  $28,000.00 
C)  $35,691.20 
D)  $31,049.00 
E)  $24,008.40

Question 5

The future value of $100 compounded semiannually for 3 years at 12% equals $140.49. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.)

Accepted Answer

A) True 
 B)False

Question 6

An individual is planning to set-up an education fund for his grandchildren. He plans to invest $10,000 annually at the end of each year. He expects to withdraw money from the fund at the end of 10 years and expects to earn an annual return of 8%. What will be the total value of the fund at the end of 10 years? (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.)

Accepted Answer

A)  $67,107 
B)  $100,000 
C)  $144,866 
D)  $46,320 
E)  $215,890

Question 7

You are little late planning your retirement, but are looking forward to retiring in 10 years. You expect to save $6,000 a year at an annual rate of 8%. How much will you have accumulated when you retire?

Accepted Answer

The answer of You are little late planning your retirement,...

Question 8

Garcia Brass Fixtures is planning on replacing one of its machines in five years by making aone-time deposit of $20,000 today and four yearly contributions of $5,000 beginning at the end of year 1. The deposits will earn 10% interest. How much money will Garcia have accumulated at the end of five years to replace the machine?

Accepted Answer

The answer of Garcia Brass Fixtures is planning on replacing...

Question 9

Jessica received a gift of $7,500 at the time of her high school graduation. She invests it in an account that yields 10% compounded semiannually. What will the value of Jessica's investment be at the end of 5 years? (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.)

Accepted Answer

A)  $10,500.00 
B)  $8,250.00 
C)  $9,375.00 
D)  $11,250.00 
E)  $12,216.75

Question 10

A company needs to have $150,000 in 5 years, and will create a fund to insure that the $150,000 will be available. If it can earn a 6% return compounded annually, how much must the company invest in the fund today to equal the $150,000 at the end of 5 years?

Accepted Answer

The answer of A company needs to have $150,000 in...

Question 11

Define interest.

Accepted Answer

The answer of Define interest....

Question 12

How long will it take an investment of $25,000 at 6% compounded annually to accumulate to a total of $35,462.50? (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.)

Accepted Answer

A)  6 years 
B)  2 years 
C)  5 years 
D)  4 years 
E)  10 years

Question 13

Interest is the borrower's payment to the owner of an asset, for its use.

Accepted Answer

A) True 
 B)False

Question 14

The present value of four $10,000 semiannual payments invested for 2 years at 12% compounded semiannually is $43,746. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.)

Accepted Answer

A) True 
 B)False

Question 15

To calculate present value of an amount, two factors are required: The ________ and the________.

Accepted Answer

The answer of To calculate present value of an amount,...

Question 16

City Peewee League borrowed $883,212, and must make annual year-end payments of $120,000 each. If City's interest rate is 6%, how many years will it take to pay off the loan?

Accepted Answer

The answer of City Peewee League borrowed $883,212, and must...

Question 17

Which column (i) and row (n) would you use from a present value or future value table for 8% interest compounded quarterly for 6 years?

Accepted Answer

A)  (i) = 2%, (n) = 24 
B)  (i) = 4%, (n) = 24 
C)  (i) = 4%, (n) = 12 
D)  (i) = 2%, (n) = 8 
E)  (i) = 8%, (n) = 6

Question 18

Jackson has a loan that requires a $17,000 lump sum payment at the end of four years. The interest rate on the loan is 5%, compounded annually. How much did Jackson borrow today?

Accepted Answer

The answer of Jackson has a loan that requires a...

Question 19

The present value of 1 formula is often useful when a borrowed asset must be repaid in full at a later date and the borrower wants to know the worth of the asset at the future date.

Accepted Answer

A) True 
 B)False

Question 20

The future value of an ordinary annuity is the accumulated value of each annuity payment excluding interest as of the date of the final payment.

Accepted Answer

A) True 
 B)False

Exam 26: Present and Future Values in Accounting

Keisha has $3,500 now and plans on investing it in a fund that will pay her 12% interest compounded quarterly. How much will Keisha have accumulated after 2 years? (^PV^of^$1, ^FV^of ^$1, ^PVA^of^$1, and ^FVA^of^$1) (Use appropriate factor(s) from the tables provided.)

Kelsey has a loan that requires a $25,000 lump sum payment at the end of three years. The interest rate on the loan is 5%, compounded annually. How much did Kelsey borrow today?

A company is setting aside $21,354 today, and wishes to have $30,000 at the end of three years for a down payment on a piece of property. What interest rate must the company earn?

What amount can you borrow if you make seven semiannual payments of $4,000 at an 8% annual rate of interest? (^PV^of^$1, ^FV^of^$1, ^PVA^of^$1, and ^FVA^of^$1) (Use appropriate factor(s) from the tables provided.)

The future value of $100 compounded semiannually for 3 years at 12% equals $140.49. (^PV^of^$1, ^FV^of^$1, ^PVA^of^$1, and ^FVA^of^$1) (Use appropriate factor(s) from the tables provided.)

You are little late planning your retirement, but are looking forward to retiring in 10 years. You expect to save $6,000 a year at an annual rate of 8%. How much will you have accumulated when you retire?

A company needs to have $150,000 in 5 years, and will create a fund to insure that the $150,000 will be available. If it can earn a 6% return compounded annually, how much must the company invest in the fund today to equal the $150,000 at the end of 5 years?

Define interest.

How long will it take an investment of $25,000 at 6% compounded annually to accumulate to a total of $35,462.50? (^PV^of^$1, ^FV^of^$1, ^PVA^of^$1, and ^FVA^of^$1) (Use appropriate factor(s) from the tables provided.)

Interest is the borrower's payment to the owner of an asset, for its use.

The present value of four $10,000 semiannual payments invested for 2 years at 12% compounded semiannually is $43,746. (^PV^of^$1, ^FV^of^$1, ^PVA^of^$1, and ^FVA^of^$1) (Use appropriate factor(s) from the tables provided.)

To calculate present value of an amount, two factors are required: The and the.

City Peewee League borrowed $883,212, and must make annual year-end payments of $120,000 each. If City's interest rate is 6%, how many years will it take to pay off the loan?

Which column (i) and row (n) would you use from a present value or future value table for 8% interest compounded quarterly for 6 years?

Jackson has a loan that requires a $17,000 lump sum payment at the end of four years. The interest rate on the loan is 5%, compounded annually. How much did Jackson borrow today?

The present value of 1 formula is often useful when a borrowed asset must be repaid in full at a later date and the borrower wants to know the worth of the asset at the future date.

The future value of an ordinary annuity is the accumulated value of each annuity payment excluding interest as of the date of the final payment.