- A $400 investment has doubled to $800 in six years because of a 12.25 percent return. How much longer will it take for the investment to reach $1100 if it continues to earn 12.25 percent? 2.76 years
- A deposit of $300 earns interest rates of 7 percent in the first year and 10 percent in the second year. What would be the second year future value? $353.10
- A deposit of $500 earns 5 percent the first year, 6 percent the second year, and 7 percent the third year. What would be the third year future value? $595.46
- A deposit of $500 earns 5 percent the first year, 6 percent the second year, and 7 percent the third year. What would be the third year future value?
$595.46 - A dollar paid (or received) in the future is not worth as much as a dollar paid (or received) today.
- A stock investor deposited $3,450 six years ago. Today the account is valued at $2,180. What annual rate of return has this investor earned? −7.37 percent
- A stock investor deposited $3,450 six years ago. Today the account is valued at $2,180. What annual rate of return has this investor earned? −7.37 percent
- A stock investor deposited $3,450 six years ago. Today the account is valued at $2,180. What annual rate of return has this investor earned?
−7.37 percent - An appliance store sells a TV for $1,200 and gives their customers a full three years to pay for the TV. If interest rates are 5 percent, what is the equivalent sales price of the TV when the customer takes the full 3 years to pay for it?
$1,036.61 - An average home in Chicago costs $295,000. If house prices are expected to grow at an average rate of 3 percent per year, what will a house cost in five years? $341,985.85
- Approximately how many years does it take to double a $475 investment when interest rates are 8 percent per year? 9 years
- Approximately what interest rate is needed to double an investment over six years? 12 percent
- Approximately what interest rate is needed to double an investment over eight years? 9 percent
- Approximately what interest rate is needed to double an investment over four years?
18 percent - Approximately what rate is needed to double an investment over five years? 14.4 percent
- Approximately what rate is needed to double an investment over five years?
14.4 percent - As the production manager of HPG, Incorporated, you have received an offer from the supplier who provides the wires used in headsets. Due to poor planning, the supplier has an excess amount of wire and is willing to sell $750,000 worth for only $600,000. You already have one year’s supply of wire on hand. This new wire would be used one year from today. What implied interest rate would your firm be earning if you purchased the wire? 25 percent
- As the production manager of HPG, Incorporated, you have received an offer from the supplier who provides the wires used in headsets. Due to poor planning, the supplier has an excess amount of wire and is willing to sell $750,000 worth for only $600,000. You already have one year’s supply of wire on hand. This new wire would be used one year from today. What implied interest rate would your firm be earning if you purchased the wire?
25 percent - At age 30 you invest $3,700 that earns 10.25 percent each year. At age 40 you invest $3,700 that earns 13.25 percent per year. In which case would you have more money at age 60?
At age 30 invest $3,700 at 10.25 percent - Compute the present value of $9,000 paid in four years using the following discount rates: 4 percent in year 1, 5 percent in year 2, 4 percent in year 3, and 3 percent in year 4. $7,693.95
- Determine the interest rate earned on a $200 deposit when $208 is paid back in one year. 4 percent
- How are present values affected by changes in interest rates? The lower the interest rate, the larger the present value will be.
- How long will it take $3,000 to reach $5,000 when it grows at 7 percent per year? 7.55 years
- How many years will it take $1 million to grow to $3 million with an annual interest rate of 7 percent? 16.24 years
- How many years will it take $100 to grow to $1,000 with an annual interest rate of 8 percent? 29.92 years
- How much would be in your savings account in 12 years if you deposited $1,500 today? Assume the bank pays 5 percent per year. $2,693.78
- If an average home in your town currently costs $350,000, and house prices are expected to grow at an average rate of 3 percent per year, what will an average house cost in “5” years? $405,745.93
- Moving cash flows from one point in time to another requires us to use both present value and future value equations.
- People borrow money because they expect their purchases to give them the satisfaction in the future that compensates them for the interest payments charged on the loan.
- Suppose a U.S. Treasury bond promises to pay $9,780.13 in three years. If bonds of this type are generating a 4 percent annual return, how much would you pay for this bond today? $8,694.50
- The Rule of 72 is a simple mathematical approximation for the number of years required to double an investment.
- To solve for time-value equations, you need to know All of these choices are correct.
- What annual rate of return is earned on a $10,000 investment when it grows to $15,000 in 10 years? 4.14 percent
- What is the future value of $2,000 deposited for one year earning 6 percent interest rate annually? $2,120
- What is the present value of a $600 payment in one year when the discount rate is 8 percent? $555.56
- What is the value in year 3 of a $250 cash flow made in year 15 when interest rates are 12 percent? $64.17
- What is the value in year 7 of a $700 cash flow made in year 3 when the interest rates are 10 percent? $1,024.87
- What would be more valuable, receiving $1,895 today or receiving $3,450 in six years if interest rates are 8 percent? receiving $3,450 in six years
- Which is more valuable, receiving $775 today or receiving $885 in 2.5 years if interest rates are 7.25 percent? receiving $775 today
- Which of the following investments would you prefer to receive today? an investment earning 3 percent for the past 40 years
- Which of the following investments would you prefer to receive today? an investment earning 5 percent for the past 40 years
- Which of the following is NOT true when developing a time line? Cash outflows are designated with a positive number
- Which of the following statements about the Rule of 72 is not true? It illustrates the power of a discounted rate.
- Which of the following statements is incorrect with respect to time lines?
Interest rates are not included on our time lines. - Which of the following will not increase a present value? increase the interest rate
- With regard to money deposited in a bank, future values are larger than present values.
- You are offered a choice between $770 today and $815 one year from today. Assume that interest rates are 4 percent. Which do you prefer? $815 one year from today
- You are offered a choice between $880 today and $915.20 one year from today. Assume that interest rates are 4 percent. Which do you prefer? They are equivalent to each other.
- You invested $1,000 for five years in an account that earns 5 percent. However, today you learn that you are able to move the account into an investment that earns 10 percent. Which of the following statements is correct? If you select the investment earning 10 percent, you will more than double your profit.
- You invested $1,000 for five years in an account that earns 5 percent. However, today you learn that you are able to move the account into an investment that earns 10 percent. Which of the following statements is correct?
If you select the investment earning 10 percent, you will more than double your profit. - You want to retire in 30 years and you have $50,000 saved in your retirement account. You believe you will need $2,000,000 upon retirement. What rate will you need to earn on the account to achieve this goal? 13.084 percent
Other Links:
See other websites for quiz:
Check on QUIZLET