Since it wasn't answered (ran out of time), I changed my question so that ONLY the correct answers are on here.
Question 1
Interest is the difference between the amount borrowed and the principal.
FALSE
Question 2
Compound interest is computed on the principal and any interest earned that has not been paid or withdrawn.
TRUE
Question 3
When the periodic payments are not equal in each period, the future value can be computed by using a future value of an annuity table.
FALSE
Question 4
The process of determining the present value is referred to as discounting the future amount.
TRUE
Question 5
A higher discount rate produces a higher present value.
FALSE
Question 6
In computing the present value of an annuity, it is not necessary to know the number of discount periods.
FALSE
Question 7
The decision to make long-term capital investments is best evaluated using discounting techniques that recognize the time value of money.
TRUE
Question 8
The factor 1.0816 is taken from the 4% column and 2 periods row in a certain table. From what table is this factor taken?
Future value of 1.
Question 9
The future value of 1 factor will always be
greater than 1
Question 10
All of the following are necessary to compute the future value of a single amount except the
Maturity value.
Question 11
Which table has a factor of 1.00000 for 1 period at every interest rate?
Future value of an annuity of 1
Question 12
McGoff Company deposits $20,000 in a fund at the end of each year for 5 years. The fund pays interest of 4% compounded annually. The balance in the fund at the end of 5 years is computed by multiplying
$20,000 by the future value of an annuity factor.
Question 13
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?
377,337
Question 14
Which of the following is not necessary to know in computing the future value of an annuity?
Year the payments begin
Question 15
In present value calculations, the process of determining the present value is called
Discounting
Question 16
Present value is based on
The dollar amount to be received.
The length of time until the amount is received.
The interest rate.
ALL OF THESE
Question 17
If you are able to earn an 8% rate of return, what amount would you need to invest to have $30,000 one year from now?
27,778
Question 18
If the single amount of $2,000 is to be received in 2 years and discounted at 11%, its present value is
1,623
Question 19
Suppose you have a winning lottery ticket and you are given the option of accepting $3,000,000 three years from now or taking the present value of the $3,000,000 now. The sponsor of the prize uses a 6% discount rate. If you elect to receive the present value of the prize now, the amount you will receive is
2,518,860
Question 20
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
8,638
Question 21
The "Table 1" factor used to calculate the future value of 10,000 earning 10% interest for 5 years is:
1.61051
Question 22
The "Table 2" factor used to calculate the future value of 3,000 received each year for 10 years, assuming 7% interest is:
13.8164
Question 23
The "Table 3" factor used to calculate the present value of 100,000 assuming 12% interest 7 years is:
.45235
Question 24
The "Table 4" factor used to calculate the present value of 5,000 assuming 6% interest for each of 5 years is:
.4.21236
Question 25
What is the present value of $10,000 today?
10,000
Since it wasn't answered (ran out of time), I changed my question so that ONLY the...
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You agree to deposit $500 at the beginning of each month into a bank account for the next 24 months. At the end of the 24th month, you will have $13,000 in your account. If the bank compounds interest monthly, what annual interest rate will you have earned? Note: Only use the formula listed and show the steps of how you reached the answer, I don't need to know just the answer, I'm trying to learn. Thank you. Don't use...