o To donload download ore more ebooks, ebooks, slides, slides,
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http://downloadslide.blogspot.comapp BStudent:1.Interest is the
payment to the owner of an asset for its use by a borrower. True
FalseFrom the perspective of a depositor, a savings account is a
liability with interest. True FalseAn interest rate is also called
a discount rate. True FalseA company can use present and future
value computations to estimate the interest component of holding
assets over time.True False1.The number of periods in a present
value calculation can only be expressed in years. True Falseo To
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ebooks, ebooks, slides, slides, SM and and TB visit: visit:
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http://downloadslide.blogspot.com6.The present value factor for
determining the present value of $6,300 to be received three years
from today at 10% interest compounded semiannually is 0.7462.True
False6.The present value of 1 formula is often useful when a
borrowed asset must be repaid in full at a later date and the
borrower wants to know its worth at the future date.True False6.In
a present value or future value table, the length of one time
period may be interpreted as one year, one month, or any other
length of time.True False6.The present value of $2,000 to be
received nine years from today at 8% interest compounded annually
is $1,000.True False6.Sandra has a savings account that has
accumulated to $50,000. She started with $28,225, and earned
interest at 10% compounded annually. It took her five years to
accumulate the $50,000. True Falseo To donload download ore more
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Future value can be found if the interest rate (i), the number of
periods (n), and the present value (p) are known.True False12. The
number of periods in a future value calculation can only be
expressed in years. True False13. The future value of $100
compounded semiannually for 3 years at 12% equals $140.49. True
False14. At an annual interest rate of 8% compounded annually,
$5,300 will accumulate to a total of $7,210.65 in 5 years.True
False15. An annuity is a series of equal payments. True False16.
The present value of an annuity table can be used to determine the
series of equal payments that are required by a loan agreement.True
False17. An ordinary annuity refers to a series of equal payments
made or received at the end of each period. True False18. The
present value of $5,000 per year for three years at 12% compounded
annually is $12,009. True False19. With deposits of $5,000 at the
end of each year, you will have accumulated $38,578 at the end of
the sixth year if the annual rate of interest is 10%True False20.
The future value of an ordinary annuity is the accumulated value of
each annuity payment with interest one period after the date of the
final payment.True False21. Interest is:A.Time.A borrower's payment
to the owner of an asset for its use.The same as a savings
account.Always a liability.Always an asset.22. Which interest rate
column would you use from a present value table or a future value
table for 8% compounded quarterly?A.12%.6%.3%.2%.1%.23. A company
is considering investing in a project that is expected to return
$350,000 four years from now. How much is the company willing to
pay for this investment if the company requires a 12%
return?A.$55,606.$137,681.$222,425.$265,764.$350,000.o To donload
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http://downloadslide.blogspot.com24. Sam has a loan that requires a
single payment of $4,000 at the end of 3 years. The loan's interest
rate is 6%, compounded semiannually. How much did Sam
borrow?A.$3,358.40$4,000.00$3,660.40$4,776.40$3,350.0025. A company
expects to invest $5,000 today at 12% annual interest and plans to
receive $15,529 at the endof the investment period. How many years
will elapse before the company accumulates the $15,529?A.0.322
years.3.1058 years.5 years.8 years.10 years.26. Keisha has $3,500
now and plans on investing it in a fund that will pay her 12%
interest compounded quarterly. How much will Keisha have
accumulated after 2
years?A.$4,433.80$4,340.00$4,390.40$3,920.00$3,500.0027. How long
will it take an investment of $25,000 at 6% compounded annually to
accumulate to a total of $35,462.50?A.4 years.5 years.6 years.2
years.10 years.28. What interest rate is required to accumulate
$6,802.50 in four years from an investment of
$5,000?A.5%.8%.10%.12%.15%.29. Crowe Company has acquired a
building with a loan that requires payments of $20,000 every six
months for 5 years. The annual interest rate on the loan is 12%.
What is the present value of the
building?A.$72,096$113,004$147,202$86,590$200,00030. Jon Shear
expects an investment of $25,000 to return $6,595 annually. His
investment is earning 10% per year. How many annual payments will
he receive?A.Five payments.Six payments.Four payments.Three
payments.More than six payments.o To donload download ore more
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A company is considering an investment that will return $20,000
semiannually at the end of each semiannual period for 4 years. If
the company requires an annual return of 10%, what is the maximum
amount it is willing to pay for this investment?A.Not more than
$63,398.Not more than $126,796.Not more than $80,000.Not more than
$129,264.Not more than $160,000.32. What amount can you borrow if
you make six quarterly payments of $4,000 at a 12 % annual rate of
interest?A.$24,838.00.$21,668.80.$31,049.00.$40,000.00.$44,800,00.33.
An individual is planning to set-up an education fund for her
children. She plans to invest $10,000 annually at the end of each
year. She expects to withdraw money from the fund at the end of 10
years and expects to earn an annual return of 8%. What will be the
total value of the fund at the end of 10
years?A.$46,320.$67,107.$100,000.$144,870.$215,890.34. Chad is
setting up a retirement fund, and he plans on depositing $5,000 per
year in an investment that will pay 7% annual interest. How long
will it take him to reach his retirement goal of $69,080?A.13.816
years0.072 years10 years20 years5 years35. What is interest?36.
Explain the concept of the present value of a single amount.o To
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http://downloadslide.blogspot.com37.Explain the concept of the
future value of a single amount.Explain the concept of the present
value of an annuity.Explain the concept of the future value of an
annuity.A company needs to have $200,000 in 4 years, and will
create a fund to insure that the $200,000 will be available. If
they can earn a 7% return, how much must the company invest in the
fund today to equal the $200,000 at the end of 4 years?Annette has
a loan that requires a $25,000 payment at the end of three years.
The interest rate on the loan is 5%, compounded annually. How much
did Annette borrow today?Thompson Company has acquired a machine
from a dealer that requires a payment of $45,000 at the end of five
years. This transaction includes interest at 8%, compounded
semiannually. What is the value of the machine today?o To donload
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http://downloadslide.blogspot.com43.A company is creating a fund
today by depositing $65,763. The fund will grow to $90,000 after 8
years. What annual interest rate is the company earning on the
fund?A company is setting aside $21,354 today, and wishes to have
$30,000 at the end of three years for a down payment on a piece of
property. What interest rate must the company earn?A company has
$50,000 today to invest in a fund that will earn 7%. How much will
the fund contain at the end of 8 years?Troy has $105,000 now. He
has a loan of $175,000 that he must pay at the end of 5 years. He
can invest his $105,000 at 10% interest compounded semiannually.
Will Troy have enough to pay his loan at the end of the 5
years?Madera Iron Sculpting is planning on replacing one of its
robotic welders in five years by making a onetime deposit of
$20,000 today and four yearly contributions of $5,000 beginning at
the end of year 1. The deposits will earn 10% interest. How much
money will Sierra have accumulated at the end of five years to
replace the welder?o To donload download ore more ebooks, ebooks,
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htp:/donloadslide.blogspot.co http://downloadslide.blogspot.com48.A
company borrows money from the bank by promising to make 6 annual
year-end payments of $25,000 each. How much is the company able to
borrow if the interest rate is 9%?A company borrows money from the
bank by promising to make 8 semiannual payments of $9,000 each. How
much is the company able to borrow if the interest rate is 10%
compounded semiannually?When you reach retirement age, you will
have one fund of $100,000 from which you are going to make annual
withdrawals of $14,702. The fund will earn 6% per year. For how
many years will you be able to draw an even amount of $14,702?Big
League Sports borrowed $883,212, and must make annual year-end
payments of $120,000 each. If Big League's interest rate is 6%, how
many years will it take Big League Sports to pay off the loan?Daley
Co. lends $524,210 to Davis Corporation. The terms of the loan
require that Davis make six semiannual period-end payments of
$100,000 each. What semiannual interest rate is Davis paying on the
loan?o To donload download ore more ebooks, ebooks, slides, slides,
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company is beginning a savings plan. It will be saving $15,000 per
year for the next 10 years. How much will the company have
accumulated after the tenth year-end deposit, assuming the fund
earns 10% interest?You are little late planning your retirement,
but are looking forward to retiring in 10 years. You expect to save
$6,000 a year at an annual rate of 8%. How much will you have
accumulated when you retire?A company is setting up a sinking fund
to pay off $8,654,000 in bonds that are due in 7 years. The fund
will earn 7% interest, and the company intends to put away a series
of equal year-end amounts for 7 years. What is the amount of the
annual deposits that the company must make?53.is a borrower's
payment to the owner of an asset for its use.55.The interest rate
is also called therate.56.To calculate present value of an amount,
two factors are required:and.57.Anis a series of equal payments
occurring at equal intervals.58.The future value of anannuity is
the accumulated value of each annuity paymentwith interest as of
the date of the final payment.o To donload download ore more
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http://downloadslide.blogspot.comFeedback:47. Answers will varyapp
B
Key1.TRUEFALSETRUETRUEFALSETRUEFALSETRUETRUE2.FALSETRUEFALSEFALSEFALSETRUETRUETRUETRUETRUEFALSEBDCEEACBCADBDCInterest
represents a borrower's payment to an owner of an asset in exchange
for its use.o To donload download ore more ebooks, ebooks, slides,
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http://downloadslide.blogspot.comFeedback:47. Answers will varyo To
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http://downloadslide.blogspot.com36.The present value of a single
amount to be received at a future date is equal to the amount that
can be invested now at the specified interest rate to yield the
future value.The future value of a single amount is equal to the
amount that would accumulate at a future date at a specified rate
of interest.The present value of an annuity is the amount that can
be invested now at the specified interest rate to yield a series of
equal periodic payments.The future value of an annuity to be
invested at a specified rate of interest is the amount that would
accumulate at the date of the final periodic payment.Feedback:
$200,000 x 0.7629 = $ 152,58037.Answers will varyFeedback: $25,000
x 0.8638 = $21,59536.Answers will varyFeedback: $45,000 x 0.6756 =
$30,40236.Answers will varyThis is the future value of 1 factor for
8 periods at 4%.Alternatively: $90,000/$65,763 = 1.3686This is the
present value of 1 factor for 8 periods at 4%. This implies the
fund is earning 4%. Feedback: $65,763/$90,000 = 0.730736.Answers
will varyThis is the future value of 1 factor for 3 periods at
12%.Alternatively: $30,000/$21,354 = 1.4049This is the present
value of 1 factor for 3 periods at 12%. This implies the company
must earn 12%. Feedback: $21,354/$30,000 = 0.711836.Answers will
varyFeedback: $50,000 x 1.7182 = $85,91042.Answers will varyNo,
Troy will be $3,965.50 short of his goal of $175,000. Feedback:
$105,000 x 1.6289 = 171,034.5036.Answers will varyo To donload
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varyFeedback: $25,000 x 4.4859 = $1 12, 147.5048.Answers will
varyFeedback: $9,000 x 6.4632 = $58,168.80 48.Answers will
varyCalculation: $100,000/$14,702 = 6.8017, the present value of 1
annuity factor at 6% for 9 periods.Feedback: Nine years.48.Answers
will varyThis is the present value of an annuity factor at 6% for
10 periods. It will take 10 years to pay off the loan. Feedback:
$883,212/$120,000 = 7.360148.Answers will varyDavis is paying a 4%
semiannual rate, or 8% annual rate of interest. This is the present
value of an annuity factor for 6 periods at 4%. Feedback:
$524,210/$100,000 = 5.242152.Answers will varyFeedback: $15,000 x
15.937 = $239,05548.Answers will varyFeedback: $6,000 x 14.487 =
$86,92248.Answers will varyFeedback: $8,654,000/8.654 = $ 1,000,000
annually48.Answers will varyInterestDiscountInterest rate (i);
Number of time periods (n)AnnuityOrdinaryo To donload download ore
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B SummaryCategory# of Questions Difficulty: Easy10Difficulty:
Hard17Difficulty: Medium32Fundamental - Appendix B...61Learning
Objective: C1 Describe the earning of interest and the concepts of
present and future values.5Learning Objective: P1 Apply present
value concepts to a single amount by using interest
tables.17Learning Objective: P2 Apply future value concepts to a
single amount by using interest tables.15Learning Objective: P3
Apply present value concepts to an annuity by using interest
tables.16Learning Objective: P4 Apply future value concepts to an
annuity by using interest tables.12
