Question 1

Match between columns
                        Premises: The factor that causes money today to be worth more than the same amount in the future.
The rate at which future dollars are equal to current dollars.
Current worth of a series of equal payments received in the future.
Amount today equivalent to a specified future amount.
Interest earned on the initial investment only.

Accepted Answer

The Answer of Time value of money and Present value is...

Question 2

If you put $500 into a savings account that pays simple interest of 8% per year and then withdraw the money two years later,you will earn interest of $80.
Simple interest = ($500 $\times$ 8%)+ ($500 $\times$ 8%)= $80.

Accepted Answer

The answer of If you put $500 into a savings...

Question 3

The future value of $1,000 invested today for three years that earns 10% compounded annually is greater than the future value of a $500 annuity with the same interest rate over the same period.

Accepted Answer

The answer of The future value of $1,000 invested today...

Question 4

Anthony would like to have $18,000 to buy a new car in three years.Currently,he has saved $15,000.If he puts $15,000 in an account that earns 6% interest,compounded annually,will he be able to buy the car in three years?

Accepted Answer

The answer of Anthony would like to have $18,000 to...

Question 5

Future value is how much an amount today will grow to be in the future.

Accepted Answer

The answer of Future value is how much an amount...

Question 6

If you put $200 into a savings account that pays annual compound interest of 8% per year and then withdraw the money two years later,you will earn interest of $32.

Accepted Answer

The answer of If you put $200 into a savings...

Question 7

Match between columns
                        Premises: Accumulation of an amount with interest.
Interest earned on the initial investment and on previous interest.
A series of equal periodic payments.
Accumulation of a series of equal payments.
A dollar now is worth more than a dollar later.

Accepted Answer

The Answer of Future value of an annuity and Discount is...

Question 8

If you put $300 into a savings account that pays annual compound interest of 10% per year and then withdraw the money two years later,you will earn interest of $63.

Accepted Answer

The answer of If you put $300 into a savings...

Question 9

The more frequent the rate of compounding,the more interest that is earned on previous interest,resulting in a higher future value.

Accepted Answer

The answer of The more frequent the rate of compounding,the...

Question 10

An annuity is a series of equal cash payments over equal time intervals.

Accepted Answer

The answer of An annuity is a series of equal...

Question 11

Compute the present value of the following single amounts to be received at the end of the specified period at the given interest rate.
 $$\begin{array} { l c c c } 
\text { Item } & \begin{array} { c c c } 
\text { Invested } \
\text { Amount }
\end{array} & \begin{array} { c } 
\text { Interest } \
\text { Rate }
\end{array} & \begin{array} { c } 
\text { Number } \
\text { of } \
\text { Periods }
\end{array} \\hline
\text { a. } & \$ 1,500 & 10 \% & 1 \
\text { b. } & \$ 1,500 & 10 \% & 2 \
\text { c. } & \$ 1,500 & 10 \% & 3 \
\text { d. } & \$ 1,500 & 10 \% & 4
\end{array}$$

Accepted Answer

The answer of Compute the present value of the following...

Question 12

Michaela would like to have $10,000 for a European vacation in four years.Currently,she has saved $8,000.If she puts $8,000 in an account that earns 6% interest,compounded annually,will she be able to take the vacation in four years?

Accepted Answer

The answer of Michaela would like to have $10,000 for...

Question 13

If you put $600 into a savings account that pays simple interest of 10% per year and then withdraw the money two years later,you will earn interest of $126.

Accepted Answer

The answer of If you put $600 into a savings...

Question 14

The discount rate is the rate at which someone is willing to give up current dollars for future dollars.

Accepted Answer

The answer of The discount rate is the rate at...

Question 15

Compute the present value of the following single amounts to be received at the end of the specified period at the given interest rate.
 $$\begin{array} { l c c c } 
\text { Item } & \begin{array} { c c c } 
\text { Invested } \
\text { Amount }
\end{array} & \begin{array} { c } 
\text { Interest } \
\text { Rate }
\end{array} & \begin{array} { c } 
\text { Number } \
\text { of } \
\text { Periods }
\end{array} \\hline
\text { a. } & \$ 40,00 & 7 \% & 20 \
\text { b. } & \$ 20,000 & 6 \% & 25 \
\text { c. } & \$ 50,000 & 11 \% & 10\
\end{array}$$

Accepted Answer

The answer of Compute the present value of the following...

Question 16

Compound interest is interest you earn on the initial investment and on previous interest.

Accepted Answer

The answer of Compound interest is interest you earn on...

Question 17

Present value indicates how much a present amount of money will grow to in the future.

Accepted Answer

The answer of Present value indicates how much a present...

Question 18

The present value of $1,000 received three years from today with a discount rate of 10% is less than the present value of a $500 annuity with the same discount rate over the same period.
The three-year annuity represents three payments of $500 (= $1,500),so the present value of the annuity is greater.

Accepted Answer

The answer of The present value of $1,000 received three...

Question 19

Compute the future value of the following invested amounts at the specified periods and interest rates.
 $$\begin{array} { l c c c } 
\text { Item } & \begin{array} { c c c } 
\text { Invested } \
\text { Amount }
\end{array} & \begin{array} { c } 
\text { Interest } \
\text { Rate }
\end{array} & \begin{array} { c } 
\text { Number } \
\text { of } \
\text { Periods }
\end{array} \\hline
\text { a. } & \$ 20,00 & 8 \% &10 \
\text { b. } & \$30,000 & 2 \% & 8 \
\text { c. } & \$ 10,000 & 12 \% & 15\
\end{array}$$

Accepted Answer

The answer of Compute the future value of the following...

Question 20

Simple interest is interest earned on the initial investment only.

Accepted Answer

The answer of Simple interest is interest earned on the...

Quiz 13: Time Value of Money

Listed below are ten terms followed by a list of phrases that describe or characterize five of the terms.Match each phrase with the best term placing the letter designating the term in the space provided.

If you put $500 into a savings account that pays simple interest of 8% per year and then withdraw the money two years later,you will earn interest of $80. Simple interest = ($500 $\times$ 8%)+ ($500 $\times$ 8%)= $80.

The future value of $1,000 invested today for three years that earns 10% compounded annually is greater than the future value of a $500 annuity with the same interest rate over the same period.

Anthony would like to have $18,000 to buy a new car in three years.Currently,he has saved $15,000.If he puts $15,000 in an account that earns 6% interest,compounded annually,will he be able to buy the car in three years?

Future value is how much an amount today will grow to be in the future.

If you put $200 into a savings account that pays annual compound interest of 8% per year and then withdraw the money two years later,you will earn interest of $32.

Listed below are ten terms followed by a list of phrases that describe or characterize five of the terms. Match each phrase with the best term placing the letter designating the term in the space provided.

If you put $300 into a savings account that pays annual compound interest of 10% per year and then withdraw the money two years later,you will earn interest of $63.

The more frequent the rate of compounding,the more interest that is earned on previous interest,resulting in a higher future value.

An annuity is a series of equal cash payments over equal time intervals.

Michaela would like to have $10,000 for a European vacation in four years.Currently,she has saved $8,000.If she puts $8,000 in an account that earns 6% interest,compounded annually,will she be able to take the vacation in four years?

If you put $600 into a savings account that pays simple interest of 10% per year and then withdraw the money two years later,you will earn interest of $126.

The discount rate is the rate at which someone is willing to give up current dollars for future dollars.

Compound interest is interest you earn on the initial investment and on previous interest.

Present value indicates how much a present amount of money will grow to in the future.

Simple interest is interest earned on the initial investment only.

Quiz 13: Time Value of Money

Listed below are ten terms followed by a list of phrases that describe or characterize five of the terms.Match each phrase with the best term placing the letter designating the term in the space provided.

If you put $500 into a savings account that pays simple interest of 8% per year and then withdraw the money two years later,you will earn interest of $80. Simple interest = ($500 ×\times× 8%)+ ($500 ×\times× 8%)= $80.

The future value of $1,000 invested today for three years that earns 10% compounded annually is greater than the future value of a $500 annuity with the same interest rate over the same period.

Anthony would like to have $18,000 to buy a new car in three years.Currently,he has saved $15,000.If he puts $15,000 in an account that earns 6% interest,compounded annually,will he be able to buy the car in three years?

Future value is how much an amount today will grow to be in the future.

If you put $200 into a savings account that pays annual compound interest of 8% per year and then withdraw the money two years later,you will earn interest of $32.

Listed below are ten terms followed by a list of phrases that describe or characterize five of the terms. Match each phrase with the best term placing the letter designating the term in the space provided.

If you put $300 into a savings account that pays annual compound interest of 10% per year and then withdraw the money two years later,you will earn interest of $63.

The more frequent the rate of compounding,the more interest that is earned on previous interest,resulting in a higher future value.

An annuity is a series of equal cash payments over equal time intervals.

Michaela would like to have $10,000 for a European vacation in four years.Currently,she has saved $8,000.If she puts $8,000 in an account that earns 6% interest,compounded annually,will she be able to take the vacation in four years?

If you put $600 into a savings account that pays simple interest of 10% per year and then withdraw the money two years later,you will earn interest of $126.

The discount rate is the rate at which someone is willing to give up current dollars for future dollars.

Compound interest is interest you earn on the initial investment and on previous interest.

Present value indicates how much a present amount of money will grow to in the future.

Simple interest is interest earned on the initial investment only.

If you put $500 into a savings account that pays simple interest of 8% per year and then withdraw the money two years later,you will earn interest of $80. Simple interest = ($500 $\times$ 8%)+ ($500 $\times$ 8%)= $80.