Question

Question 11 pts

An annuity is best defined as:

Group of answer choices

a series of payments for a specified period of time

any series of payments

a series of equal payments occurring at equal time intervals for a specified number of periods

a series of equal payments for a specified number of years

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Question 21 pts

A perpetuity can be described as:

Group of answer choices

an annuity that goes on forever

an annuity that lasts longer than 25 years

an amount of interest that is annually adjusted up or down and is paid forever

principal that is repaid after 100 years

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Question 31 pts

As the discount rate increases, the present value of a given positive cash flow to be received at a particular time in the future:

Group of answer choices

gets larger without limit

gets closer to zero

gets smaller without limit

stays unchanged

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Question 41 pts

As the discount rate decreases (including negative values), the present value of a given positive cash flow to be received at a particular time in the future:

Group of answer choices

gets closer to zero

stays unchanged

gets larger without limit

gets smaller without limit

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Question 51 pts

Compound interest can best be described as:

Group of answer choices

interest earned on the original principal

interest earned on interest and interest earned on the original principal

the discount rate

interest earned on interest only

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Question 61 pts

If (1) the interest rate has been increased and (2) the compounding frequency has been increased, what impact would this have on the future value of the single dollar amount you just deposited?

Group of answer choices

(1)increase; (2)decrease

(1)decrease; (2)increase

(1)increase; (2)increase

(1)decrease; (2)decrease

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Question 71 pts

If you (1) decrease your required return and (2) decrease the number of periods, what effect would this have on your calculation of the present value of a given dollar amount?

Group of answer choices

(1)increase; (2)increase

(1)decrease; (2)decrease

(1)decrease; (2)increase

(1)increase; (2)decrease

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Question 81 pts

The discount rate can best be described as:

Group of answer choices

present value interest factor

an opportunity cost

real rate of interest

prime rate of interest

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Question 91 pts

The future value interest factor for a single dollar amount is:

Group of answer choices

(1 + k)ⁿ

1/(1 + k)ⁿ

(1 + k)ⁿ times the present value

discount rate used in future value cash flow calculations

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Question 101 pts

The present value interest factor for a single dollar amount is:

Group of answer choices

1/(1 + k)ⁿ

discount rate used in present value cash flow calculations

1/(1 + k)ⁿ times the future value

(1 + k)ⁿ

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Question 111 pts

To calculate the present value of an annuity due you would take the present value of an ordinary annuity answer and _____ and to calculate the future value of an annuity due you would take the future value of an ordinary annuity answer and _____.

Group of answer choices

multiply by k; divide by k

divide by (1+k); multiply by (1+k)

multiply by (1+k); divide by (1+k)

multiply by (1+k); multiply by (1+k)

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Question 121 pts

You want to start saving for retirement. If you deposit $2,000 at the end of each year for the next 60 years and earn an 11% annual rate of return on the investment, how much will you have when you retire if the above payments are made at the beginning of each year?

Group of answer choices

$10,556,246

$1,048,114

$9,510,132

$792,000

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Question 131 pts

What a deal! Your new car only costs $28,300 after rebates and trade. If you finance it for 60 months at 6% annual interest, what will be your monthly payment?

Group of answer choices

$471.67

$1,751.08

$547.12

$544.40

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Question 141 pts

What is the future value of an annuity due if your required return is 10%, and annual payments are $1,000 for 10 years?

Group of answer choices

$11,000

$16,145

$15,937

$17,531

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Question 151 pts

What is the present value of $100,000 to be received in 15 years with an annual discount rate of 5%? This amount is discounted monthly.

Group of answer choices

$ 47,310

$ 25,000

$ 48,102

$207,893

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Question 161 pts

When we consider the time value of money, a dollar received in the future:

Group of answer choices

may be worth more or less than a dollar received today

is worth more than a dollar received today

is worth the same as a dollar received today

is worth less than a dollar received today

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Question 171 pts

With respect to the time value of money, the future value of a given dollar amount has what kind of relationship to the rate of interest used in computing the future value?

Group of answer choices

a negative relationship

no relationship

logarithmic

a positive relationship

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Question 181 pts

With respect to the time value of money, the present value of a given dollar amount has what kind of relationship to the discount rate used in computing the present value?

Group of answer choices

logarithmic

a negative relationship

no relationship

a positive relationship

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Question 191 pts

You deposit $10,000 in a bank and plan to keep it there for five years. The bank pays 8% annual interest compounded continuously. Calculate the future value at the end of five years.

Group of answer choices

$14,693

$14,500

$14,918

$15,000

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Question 201 pts

Your parents have promised to give you $25,000 on your wedding day if you wait 10 years to get married. Your sister is getting married today. What amount should she receive in today's dollars to match your gift? The appropriate discount rate is 12%

Group of answer choices

$8,049

$22,321

$10,000

$25,000

Answer 1

An annuity is best defined as:

a series of equal payments occurring at equal time intervals for a specified number of periods

Annuity is a series of equal payments at equal intervals of time

A perpetuity can be described as:

an annuity that goes on forever

As the discount rate increases, the present value of a given positive cash flow to be received at a particular time in the future:

gets smaller without limit

as higher the discount rate, lower the present value

As the discount rate decreases (including negative values), the present value of a given positive cash flow to be received at a particular time in the future:

gets smaller without limit

Lower the discount rate, lower the future value

Compound interest can best be described as:

interest earned on interest and interest earned on the original principal

(1)increase; (2)increase

(1)increase; (2)increase

An opportunity cost

(1 + k)ⁿ

1/(1 + k)ⁿ