Exam 4: Time Value of Money 1: Analyzing Single Cash Flows

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Future Value At age 20 you invest $1,000 that earns 7 percent each year. At age 30 you invest $1,000 that earns 10 percent per year. In which case would you have more money at age 60?

(Multiple Choice)

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Question 101

A $2 million deposit earns 7% for 13 years. If the account earns 9% per year forever after that, how long will it take to grow to $5 million?

(Multiple Choice)

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Question 102

We call the process of earning interest on both the original deposit and on the earlier interest payments:

(Multiple Choice)

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Question 103

Determine the interest rate earned on a $800 deposit when $808 is paid back in one year.

(Multiple Choice)

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Question 104

Moving Cash Flows What is the value in year 3 of a $500 cash flow made in year 5 when interest rates are 6 percent?

(Multiple Choice)

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Question 105

A deposit of $500 earns 5% the first year, 6% the second year and 7% the third year. What would be the third year future value?

(Multiple Choice)

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Question 106

Moving Cash Flows What is the value in year 3 of a $250 cash flow made in year 15 when interest rates are 12 percent?

(Multiple Choice)

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Question 107

How are present values affected by changes in interest rates?

(Multiple Choice)

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Question 108

Which of the following would you prefer?

(Multiple Choice)

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Question 109

You double your money in 5 years. The reason your return is not 20% per year is because ___.

(Multiple Choice)

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Question 110

Compute the present value of $3,000 paid in four years using the following discount rates: 3% in year 1, 4% in year 2, 5% in year 3, and 6% in year 4.

(Multiple Choice)

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Question 111

What is the value in year 3 of a $10,000 cash flow made in year 20 if interest rates are 5%?

(Multiple Choice)

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Question 112

How long will it take for the purchasing power of $1 to be cut in half if inflation is 4%?

(Multiple Choice)

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Question 113

Approximately what rate is needed to double an investment over five years?

(Multiple Choice)

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Question 114

Say you double your money in five years. Explain why the rate of return is NOT 20 percent per year.

(Essay)

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Question 115

Which is more valuable, receiving $775 today or receiving $885 in two and one-half years if interest rates are 7.25%?

(Multiple Choice)

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Question 116

Which of the following is NOT true when developing a time line?

(Multiple Choice)

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Question 117

The interest rate, i, which we use to calculate present value, is often referred to as the:

(Multiple Choice)

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Question 118

A $1,000 investment has doubled to $2,000 in seven years. How much longer will it take for the investment to reach $5,000 if it continues to earn the same rate?

(Multiple Choice)

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Question 119

With regard to money deposited in a bank, future values are:

(Multiple Choice)

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Question 120

Showing 101 - 120 of 143

Future Value At age 20 you invest $1,000 that earns 7 percent each year. At age 30 you invest $1,000 that earns 10 percent per year. In which case would you have more money at age 60?

A $2 million deposit earns 7% for 13 years. If the account earns 9% per year forever after that, how long will it take to grow to $5 million?

We call the process of earning interest on both the original deposit and on the earlier interest payments:

Determine the interest rate earned on a $800 deposit when $808 is paid back in one year.

Moving Cash Flows What is the value in year 3 of a $500 cash flow made in year 5 when interest rates are 6 percent?

A deposit of $500 earns 5% the first year, 6% the second year and 7% the third year. What would be the third year future value?

Moving Cash Flows What is the value in year 3 of a $250 cash flow made in year 15 when interest rates are 12 percent?

How are present values affected by changes in interest rates?

Which of the following would you prefer?

You double your money in 5 years. The reason your return is not 20% per year is because ___.

Compute the present value of $3,000 paid in four years using the following discount rates: 3% in year 1, 4% in year 2, 5% in year 3, and 6% in year 4.

What is the value in year 3 of a $10,000 cash flow made in year 20 if interest rates are 5%?

How long will it take for the purchasing power of $1 to be cut in half if inflation is 4%?

Approximately what rate is needed to double an investment over five years?

Say you double your money in five years. Explain why the rate of return is NOT 20 percent per year.

Which is more valuable, receiving $775 today or receiving $885 in two and one-half years if interest rates are 7.25%?

Which of the following is NOT true when developing a time line?

The interest rate, i, which we use to calculate present value, is often referred to as the:

A $1,000 investment has doubled to $2,000 in seven years. How much longer will it take for the investment to reach $5,000 if it continues to earn the same rate?

With regard to money deposited in a bank, future values are:

Introduction to Financial Management

Reviewing Financial Statements

Analyzing Financial Statements

Time Value of Money 2: Analyzing Annuity Cash Flows

Understanding Financial Markets and Institutions

Valuing Bonds

Valuing Stocks

Characterizing Risk and Return

Estimating Risk and Return

Calculating the Cost of Capital

Estimating Cash Flows on Capital Budgeting Projects

Weighing Net Present Value and Other Capital Budgeting Criteria

Working Capital Management and Policies

Financial Planning and Forecasting

Assessing Long-Term Debt, Equity, and Capital Structure

Sharing Firm Wealth: Dividends, Share Repurchases, and Other Payouts

Issuing Capital and the Investment Banking Process

International Corporate Finance

Mergers and Acquisitions and Financial Distress

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