FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 4: The Time Value of Money

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 51

Multiple Choice

Review LaterAdd Note

Review Later

If the current rate of interest is 8%, then the future value 20 years from now of an investment that pays $1000 per year and lasts 20 years is closest to:

A) $45,762
B) $36,725
C) $9,818
D) $93,219

Correct Answer

verified

Show Answer

Question 52

Multiple Choice

Review LaterAdd Note

Review Later

If the current rate of interest is 8% APR, then the present value of an investment that pays $250 per quarter and lasts 20 years is closest to:

A) $18,519
B) $48,443
C) $9,936
D) $20,000

Correct Answer

verified

Show Answer

Question 53

Multiple Choice

Review LaterAdd Note

Use the following timeline to answer the question(s) below. 0 1 2 3 $600 $1,200 $1,800 -Taggart Transcontinental currently has a bank loan outstanding that requires it to make three annual payments at the end of the next three years of $1,000,000 each. The bank has offered to allow Taggart Transcontinental to skip making the next two payments in lieu of making one large payment at the end of the loan's term in three years. If the interest rate on the loan is 6%, then the final payment that the bank will require to make Taggart Transcontinental indifferent between the two forms of payments is closest to:

Which of the following statements regarding perpetuities is FALSE?

Use the information for the question(s) below. Joe just inherited the family business, and having no desire to run the family business, he has decided to sell it to an entrepreneur. In exchange for the family business, Joe has been offered an immediate payment of $100,000. Joe will also receive payments of $50,000 in one year, $50,000 in two years, and $75,000 in three years. The current market rate of interest for Joe is 6%. -Draw a timeline detailing Joe's cash flows from the sale of the family business.

Which of the following statements regarding growing annuities is FALSE?

Use the figure for the question(s) below. -Which of the following statements regarding the timeline is FALSE?

Which of the following is NOT a valid time value of money function in Excel?

Consider the following timeline detailing a stream of cash flows: If the current market rate of interest is 10%, then the present value of this stream of cash flows is closest to: