Time Value of Money
Time Value of Money Problems
1. What will a deposit of $4,500 at 10% compounded semiannually be worth if left in the bank for six years?
a. $8,020.22
b. $7,959.55
c. $8,081.55
d. $8,181.55
2. What will a deposit of $4,500 at 7% annual interest be worth if left in the bank for nine years?
a. $8,273.25
b. $8,385.78
c. $8,279.23
d. $7,723.25
3. What will a deposit of $4,500 at 12% compounded monthly be worth at the end of 10 years?
a. $14,351.80
b. $14,851.80
c. $13,997.40
d. $14,304.80
4. How much will $1,000 deposited in a savings account earning an annual interest rate of 6 percent be worth at the end of 5 years?
a. $1,338
b. $1,348
c. $1,388
d. $1,438
5. How much will $1,000 deposited in a savings account earning a compound annual interest rate of
6 percent be worth at the end of 3 years?
a. $1,199
b. $1,191
c. $1,891
d. $1,389
6. Given an annual opportunity cost of 10%, what is the future value of a $1,000 ordinary annuity for 1 year?
a. $1,200
b. $1,120
c. $1,100
d. $1,210
7. Given an annual opportunity cost of 10%, what is the future value of a $1,000 ordinary annuity for 10 years?
a. $15,937
b. $15,739
c. $10,000
d. $12,000
8. If you require a 9 percent annual return on your investments, you would prefer $15,000 five years from today rather than an ordinary annuity of $1,000 per year for 15 years.
a. True
b. False
9. How long does it take for $5,000 to grow into $6,724.44 at 10% compounded quarterly?
a. 2 years.
b. 3 years.
c. 4 years.
d. 30 months.
10. How long does it take for $856 to grow into $1,122 at an annual interest rate of 7%?
a. 2 years.
b. 6 years.
c. 4 years.
d. 30 months.
11. How much will an ordinary annuity of $650 per year be worth in eight years at an annual interest rate of 6 percent?
a. $8,975.38
b. $6,897.76
c. $7,021.80
d. $6,433.38
12. How much will an ordinary annuity of $650 per year be worth in eight years at an annual interest rate of 8 percent?
a.
1. What will a deposit of $4,500 at 10% compounded semiannually be worth if left in the bank for six years?
a. $8,020.22
b. $7,959.55
c. $8,081.55
d. $8,181.55
2. What will a deposit of $4,500 at 7% annual interest be worth if left in the bank for nine years?
a. $8,273.25
b. $8,385.78
c. $8,279.23
d. $7,723.25
3. What will a deposit of $4,500 at 12% compounded monthly be worth at the end of 10 years?
a. $14,351.80
b. $14,851.80
c. $13,997.40
d. $14,304.80
4. How much will $1,000 deposited in a savings account earning an annual interest rate of 6 percent be worth at the end of 5 years?
a. $1,338
b. $1,348
c. $1,388
d. $1,438
5. How much will $1,000 deposited in a savings account earning a compound annual interest rate of
6 percent be worth at the end of 3 years?
a. $1,199
b. $1,191
c. $1,891
d. $1,389
6. Given an annual opportunity cost of 10%, what is the future value of a $1,000 ordinary annuity for 1 year?
a. $1,200
b. $1,120
c. $1,100
d. $1,210
7. Given an annual opportunity cost of 10%, what is the future value of a $1,000 ordinary annuity for 10 years?
a. $15,937
b. $15,739
c. $10,000
d. $12,000
8. If you require a 9 percent annual return on your investments, you would prefer $15,000 five years from today rather than an ordinary annuity of $1,000 per year for 15 years.
a. True
b. False
9. How long does it take for $5,000 to grow into $6,724.44 at 10% compounded quarterly?
a. 2 years.
b. 3 years.
c. 4 years.
d. 30 months.
10. How long does it take for $856 to grow into $1,122 at an annual interest rate of 7%?
a. 2 years.
b. 6 years.
c. 4 years.
d. 30 months.
11. How much will an ordinary annuity of $650 per year be worth in eight years at an annual interest rate of 6 percent?
a. $8,975.38
b. $6,897.76
c. $7,021.80
d. $6,433.38
12. How much will an ordinary annuity of $650 per year be worth in eight years at an annual interest rate of 8 percent?
a.