Which of the following would increase the future value of a single cash flow?

a. A decrease in the interest rate

b. An increase in the interest rate

c. An increase in the time period

d. A decrease in the cash flow

Which of the following would yield the highest future value for an amount invested for the same amount of time at the same annual interest rate?

a. Simple interest if invested for only 1 year

b. Compound invested for only 1 year

c. Simple interest if invested for more than 1 year

d. Compound interest if invested for only 1 year

Which of the following would increase the present value of a single cash flow?

a. An increase in the time period

b. A decrease in the cash flow

c. An increase in the interest rate

d. None of the above

A series of or equal periodic cash flows is known as a(n) _______________.

a. Annunity

b. Future value

c. Present value

d. None of the above

What is the relationship between the present value of an ordinary annuity and the present value of an annuity-due with the same number of payments and the same interest rate?

a. The present value of an ordinary annuity = the present value of an annuity-due times 1 plus the relevant interest rate.

b. The present value of an ordinary annuity = the present value of an annuity-due divided by 1 plus the relevant interest rate.

c. The present value of an annuity-due = the present value of an ordinary annuity times 1 plus the relevant interest rate.

d. The present value of an annuity-due = the present value of an ordinary annuity divided by 1 plus the relevant interest rate.

Which of the following has the highest time value of money at the same interest rate for the same number of payments?

a. The future value of an annuity-due

b. The future value of an ordinary annuity

c. The present value of an annuity-due

d. The present value of an ordinary annuity

Your grandparents have given you an early college gift of $5,000 that you would like to save to fund a post-graduation trip to Europe in 3 years. How much will you have for your trip in 3 years if you can invest this gift at 5% compounded annually? (express your answer as the nearest whole dollar amount?

– ________

Titus Tribble wins the big Powerball lottery which pays $17 million at the beginning of each of the next 30 years. The reported prize is $510 million which is just the total of these 30 annuity payments. What is the present value of this prize today at a 5% annual rate? Express your answer in terms of millions of dollars and round the answer to the nearest tenth of a million, for example 17.0 for 17 million.

– ________

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