Question

* Time Value of Money *

1. What rate of return did I earn if I invest 50k and receive 75k 7 years later?

2. What is the FV(Future Value) of a series of 7,000 payments over 10 years if I can earn 9%

3. (T/F) The higher the future payments the higher my PV all else equal

4. (T/F) The lower the discount rate the lower my PV(Present Value) on a series of future payments

5. (T/F) Essentially, the value of stocks and bonds is the discounted value of their cash flows or dividends.

6. What is my monthly mortgage payment on a 200k home with a 5% interest rate on a 30 year mortgage

a.13,010

b. 1,074

c. 1,084

d. 556

7. (T/F) To calculate a loan payment I must adjust my number of periods and my interest rate to reflect the payment terms (monthly, quarterly)

8. What is the PV of a series of 5,000 payments over 5 years if the discount rate is 8%?

1. 19,964
2. 25,000
3. Cannot be determined
4. 29,333

9. How many years will it take to generate 500k if I can invest 50k now and invest 5k annually at a rate of 8%

10. (T/F) The higher the rate earned the fewer number of years it will take to get to a given future value

Answer 1

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