Question 1

Use the following two columns of items to answer the matching questions below:
-discounting

Accepted Answer

A) the process of obtaining present values 
B) a factor multiplied by a future value to get the present value of that amount 
A) the process of obtaining present values 
B) a factor multiplied by a future value to get the present value of that amount

Question 2

A stream of equal payments either received or paid at equal time intervals is a(n)________.

Accepted Answer

The answer of A stream of equal payments either received...

Question 3

In order to maximize the use of your money,you may want to delay payment of your bills slightly beyond their due dates.

Accepted Answer

A) True 
 B)False

Question 4

Use the following two columns of items to answer the matching questions below:
-present value interest factor

Accepted Answer

A) the process of obtaining present values 
B) a factor multiplied by a future value to get the present value of that amount 
A) the process of obtaining present values 
B) a factor multiplied by a future value to get the present value of that amount

Question 5

The time value of money refers to

Accepted Answer

A)  personal opportunity costs such as time lost on an activity. 
B)  financial decisions that require borrowing funds from a bank. 
C)  changes in interest rates due to changes in the supply and demand for money in the national economy. 
D)  the difference in the value of money depending on when it is received. 
A)  personal opportunity costs such as time lost on an activity. 
B)  financial decisions that require borrowing funds from a bank. 
C)  changes in interest rates due to changes in the supply and demand for money in the national economy. 
D)  the difference in the value of money depending on when it is received.

Question 6

An annuity is a stream of equal payments that are received or paid at equal intervals in time.

Accepted Answer

A) True 
 B)False

Question 7

The time value of money can be applied to all of the following except

Accepted Answer

A)  bond valuation. 
B)  stock valuation. 
C)  determining the current market value of your home. 
D)  determining the amount of taxes owed on income this year. 
A)  bond valuation. 
B)  stock valuation. 
C)  determining the current market value of your home. 
D)  determining the amount of taxes owed on income this year.

Question 8

Using the Time Value of Money charts provided,answer the following question.(Note to Instructors: Provide the appropriate tables to students from Personal Finance,Sixth Edition,Appendix C: Financial Tables.) Jack is 35 years old and is planning to retire at age 65.Based on a variety of factors,he is planning a retirement of 20 years.Jack determines that he will need $20,000 per year during his 20 years of retirement.If he can invest at 9%,how much will he need to save each year beginning today to reach his goal?

Accepted Answer

A)  $11,428.57 
B)  $6,086.00 
C)  $1,339.47 
D)  $20,000.00 
A)  $11,428.57 
B)  $6,086.00 
C)  $1,339.47 
D)  $20,000.00

Question 9

How many years will it take for $35 to grow to $53.87 if it is invested at 9% compounded annually?

Accepted Answer

A)  6.0 
B)  5.5 
C)  5.0 
D)  4.0 
A)  6.0 
B)  5.5 
C)  5.0 
D)  4.0

Question 10

After completing this chapter,do you feel comfortable using your financial calculator for decisions? List several large financial decisions and how you could apply your newly acquired knowledge to make the best choice.

Accepted Answer

There are a multitude of accep

Question 11

At what annual rate would $200.00 grow to $497.60 in five years?

Accepted Answer

A)  19% 
B)  18% 
C)  20% 
D)  22% 
A)  19% 
B)  18% 
C)  20% 
D)  22%

Question 12

How many years will it take for $500 to grow to $1,039.50 if it is invested at 5% compounded annually?

Accepted Answer

A)  15 
B)  14 
C)  13 
D)  12 
A)  15 
B)  14 
C)  13 
D)  12

Question 13

Don wants to know how much he needs to save every year to amass $15,000 in five years at a 5% interest rate.What is he calculating using his financial calculator?

Accepted Answer

A)  Present value 
B)  Future value 
C)  Interest rate 
D)  Payment 
A)  Present value 
B)  Future value 
C)  Interest rate 
D)  Payment

Question 14

The process of obtaining ________ values is referred to as discounting.

Accepted Answer

A)  present 
B)  future 
C)  current 
D)  inflated 
A)  present 
B)  future 
C)  current 
D)  inflated

Question 15

Time value of money calculations,such as present and future value amounts,can be applied to many day-to-day decisions.

Accepted Answer

A) True 
 B)False

Question 16

The time value of money concept can help you determine how much money you need to save over a period of time to achieve a specific savings goal.

Accepted Answer

A) True 
 B)False

Question 17

If you invest $12,000 today at an interest rate of 10%,how much will you have in 10 years?

Accepted Answer

A)  $31,128 
B)  $25,940 
C)  $13,860 
D)  $40,712 
A)  $31,128 
B)  $25,940 
C)  $13,860 
D)  $40,712

Question 18

If Lucky Louie won a lottery and chose to take $1,000,000 in cash (disregarding taxes),how much money would he have in 30 years if he invested at 6% per annum?

Accepted Answer

A)  $5,743,491 
B)  $5,804,268 
C)  $6,050,972 
D)  Not enough information is provided to solve the problem 
A)  $5,743,491 
B)  $5,804,268 
C)  $6,050,972 
D)  Not enough information is provided to solve the problem

Question 19

John would like to save $1,500,000 by the time he retires in 30 years and believes he can earn an annual return of 8%.How much does he need to invest each year to achieve his goal?

Accepted Answer

A)  $13,242 
B)  $18,900 
C)  $20,518 
D)  none of the above 
A)  $13,242 
B)  $18,900 
C)  $20,518 
D)  none of the above

Question 20

Use the following two columns of items to answer the matching questions below:
-compounding

Accepted Answer

A) the process of earning interest on interest 
B) a series of equal payments received or paid at equal intervals 
C) a factor multiplied by today's savings to determine how the savings will accumulate over time 
D) a business calculator that performs PV/FV calculations 
A) the process of earning interest on interest 
B) a series of equal payments received or paid at equal intervals 
C) a factor multiplied by today's savings to determine how the savings will accumulate over time 
D) a business calculator that performs PV/FV calculations

Use the following two columns of items to answer the matching questions below: -discounting

A stream of equal payments either received or paid at equal time intervals is a(n)________.

In order to maximize the use of your money,you may want to delay payment of your bills slightly beyond their due dates.

Use the following two columns of items to answer the matching questions below: -present value interest factor

The time value of money refers to

An annuity is a stream of equal payments that are received or paid at equal intervals in time.

The time value of money can be applied to all of the following except

How many years will it take for $35 to grow to $53.87 if it is invested at 9% compounded annually?

After completing this chapter,do you feel comfortable using your financial calculator for decisions? List several large financial decisions and how you could apply your newly acquired knowledge to make the best choice.

At what annual rate would $200.00 grow to $497.60 in five years?

How many years will it take for $500 to grow to $1,039.50 if it is invested at 5% compounded annually?

Don wants to know how much he needs to save every year to amass $15,000 in five years at a 5% interest rate.What is he calculating using his financial calculator?

The process of obtaining ________ values is referred to as discounting.

Time value of money calculations,such as present and future value amounts,can be applied to many day-to-day decisions.

The time value of money concept can help you determine how much money you need to save over a period of time to achieve a specific savings goal.

If you invest $12,000 today at an interest rate of 10%,how much will you have in 10 years?

If Lucky Louie won a lottery and chose to take $1,000,000 in cash (disregarding taxes),how much money would he have in 30 years if he invested at 6% per annum?

John would like to save $1,500,000 by the time he retires in 30 years and believes he can earn an annual return of 8%.How much does he need to invest each year to achieve his goal?

Use the following two columns of items to answer the matching questions below: -compounding

Overview of a Financial Plan

Planning With Personal Financial Statements

Using Tax Concepts for Planning

Banking and Interest Rates

Managing Your Money

Assessing and Securing Your Credit

Managing Your Credit

Personal Loans

Purchasing and Financing a Home

Auto and Homeowners Insurance

Health and Disability Insurance

Life Insurance

Investing Fundamentals

Investing in Stocks

Investing in Bonds

Investing in Mutual Funds

Asset Allocation

Retirement Planning

Estate Planning

Integrating the Components of a Financial Plan

Filters

Exam 3: Applying Time Value Concepts

Use the following two columns of items to answer the matching questions below: -discounting

A stream of equal payments either received or paid at equal time intervals is a(n)________.

In order to maximize the use of your money,you may want to delay payment of your bills slightly beyond their due dates.

Use the following two columns of items to answer the matching questions below: -present value interest factor

The time value of money refers to

An annuity is a stream of equal payments that are received or paid at equal intervals in time.

The time value of money can be applied to all of the following except

How many years will it take for $35 to grow to $53.87 if it is invested at 9% compounded annually?

After completing this chapter,do you feel comfortable using your financial calculator for decisions? List several large financial decisions and how you could apply your newly acquired knowledge to make the best choice.

At what annual rate would $200.00 grow to $497.60 in five years?

How many years will it take for $500 to grow to $1,039.50 if it is invested at 5% compounded annually?

Don wants to know how much he needs to save every year to amass $15,000 in five years at a 5% interest rate.What is he calculating using his financial calculator?

The process of obtaining ________ values is referred to as discounting.

Time value of money calculations,such as present and future value amounts,can be applied to many day-to-day decisions.

The time value of money concept can help you determine how much money you need to save over a period of time to achieve a specific savings goal.

If you invest $12,000 today at an interest rate of 10%,how much will you have in 10 years?

If Lucky Louie won a lottery and chose to take $1,000,000 in cash (disregarding taxes),how much money would he have in 30 years if he invested at 6% per annum?

John would like to save $1,500,000 by the time he retires in 30 years and believes he can earn an annual return of 8%.How much does he need to invest each year to achieve his goal?

Use the following two columns of items to answer the matching questions below: -compounding

Overview of a Financial Plan

Planning With Personal Financial Statements

Using Tax Concepts for Planning

Banking and Interest Rates

Managing Your Money

Assessing and Securing Your Credit

Managing Your Credit

Personal Loans

Purchasing and Financing a Home

Auto and Homeowners Insurance

Health and Disability Insurance

Life Insurance

Investing Fundamentals

Investing in Stocks

Investing in Bonds

Investing in Mutual Funds

Asset Allocation

Retirement Planning

Estate Planning

Integrating the Components of a Financial Plan

Filters