FIN 370 Week 2 Assignment | University of Phoenix
- University of Phoenix / FIN 370
- 05 Jul 2021
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- Accounting & Economics Assignment Help / Finance
FIN 370 Week 2 Assignment | University of Phoenix
1
We call the process of earning interest on both the original deposit and on the earlier interest payments
Multiple Choice
•
future value.
•
compounding.
•
simple interest.
•
discounting.
2.
How much would be in your savings account in 10 years after depositing $50 today if the bank pays 7 percent interest per year?
Multiple Choice
•
$98.36
•
$690.82
•
$35.00
•
$535.00
3
Which of the following is NOT true when developing a time line?
Multiple Choice
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Cash outflows are designated with a positive number.
•
Cash inflows are designated with a positive number.
In
•
The time line shows the magnitude of cash flows at different points in time.
•
The cost is known as the interest rate.
4.
If an average home in your town currently costs $300,000, and house prices are expected to grow at an average rate of 5 percent per year, what will an average house cost in 10 years?
Multiple Choice
•
$483,153.01
•
$488,688.39
•
$507,593.74
•
$450,000.00
Which of the following statements is ?
Multiple Choice
• $100 to be received in the future is worth more than that today since it could be invested and earn interest.
• The Rule of 72 calculates the compounded return on investments.
• Discounting is finding the future value of an original investment.
• $100 to be received in the future is worth less than that today since it could be invested and earn interest.
6.
Time value of money concepts can be used by
Multiple Choice
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individuals doing personal financial planning.
•
CFOs and CEOs to make business decisions.
•
All of these choices are .
•
investors calculating a return on an investment.
7.
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?
Multiple Choice
•
$770 today
•
They are equivalent to each other.
•
$815 one year from today
•
$770 today at 3 percent interest rates
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Question 7 of 30 Total7
8.
Approximately how many years does it take to double a $475 investment when interest rates are 8 percent per year?
Multiple Choice
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12 years
•
9 years
•
18 years
•
4.75 years
9.
Multiple Choice
•
dividend.
•
multiplier.
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discount rate.
•
compound rate.
10.
Approximately what interest rate is needed to double an investment over eight years?
Multiple Choice
•
8 percent
•
9 percent
•
12 percent
•
100 percent
11.
What is the present value of a $600 payment in one year when the discount rate is 8 percent?
Multiple Choice
•
$555.56
•
$498.61
•
$575.09
•
$525.87
12.
How are present values affected by changes in interest rates?
Multiple Choice
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The higher the interest rate, the larger the present value will be.
•
Present values are not affected by changes in interest rates.
•
The lower the interest rate, the larger the present value will be.
•
One would need to know the future value in order to determine the impact.
13.
The process of figuring out how much an amount that you expect to receive in the future is worth today is called
Multiple Choice
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multiplying.
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discounting.
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compounding.
•
computing.
14.
A dollar paid (or received) in the future is
Multiple Choice
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worth as much as a dollar paid (or received) today.
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not comparable to a dollar paid (or received) today.
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worth more than a dollar paid (or received) today.
•
not worth as much as a dollar paid (or received) today.
15.
Determine the interest rate earned on a $1,500 deposit when $1,680 is paid back in one year.
Multiple Choice
•
12.00 percent
•
1.12 percent
•
89.00 percent
•
0.89 percent
16.
Determine the interest rate earned on a $450 deposit when $475 is paid back in one year.
Multiple Choice
•
0.89 percent
•
5.56 percent
•
13.0 percent
•
1.13 percent
17.
Determine the interest rate earned on an $800 deposit when $808 is paid back in one year.
Multiple Choice
•
1 percent
•
10 percent
•
100 percent
•
15 percent
18.
What is the future value of a $1,000 annuity payment over 4 years if the interest rates are 8 percent?
Multiple Choice
• $4,320.00
• $9,214.20
• $3,312.10
• $4,506.11
19.
What is the future value of a $500 annuity payment over eight years if interest rates are 14 percent?
Multiple Choice
• $6,241.09
• $6,616.38
• $6,809.72
• $6,750.14
20.
n order to discount multiple cash flows to the present, one would use
Multiple Choice
• the appropriate tax rate.
• the appropriate compound rate.
• the appropriate discount rate.
• the appropriate simple rate.
21.
Which of the following will increase the future value of an annuity?
Multiple Choice
• The number of periods increases.
• The amount of the annuity increases.
• The interest rate increases.
• All of these choices are .
22.
What is the future value of an $800 annuity payment over 15 years if the interest rates are 6 percent?
Multiple Choice
• $7,002.99
• $1,917.25
• $18,620.78
• $12,720.00
23.
If the present value of an ordinary, 8-year annuity is $12,500 and interest rates are 9.1 percent, what is the present value of the same annuity due?
Multiple Choice
• $13,941.90
• $14,211.90
• $14,114.80
• $13,637.50
24.
If the future value of an ordinary, 11-year annuity is $5,575 and interest rates are 5.5 percent, what is the future value of the same annuity due?
Multiple Choice
• $5,881.63
• $5,947.88
• $5,619.52
• $5,769.06
25.
Many people who want to start investing for their future want to start today, which implies an annuity stream that is paid at the beginning of the period. Beginning-of-period cash flows are referred to as
Multiple Choice
• annuities due.
• ordinary annuities.
• present values.
• perpetuities.
26.
What is the present value of a $1,100 payment made every year forever when interest rates are 4.5 percent?
Multiple Choice
• $22,963.14
• $21,089.37
• $11,100
• $24,444.44
27.
If the future value of an ordinary, 4-year annuity is $1,000 and interest rates are 6 percent, what is the future value of the same annuity due?
Multiple Choice
• $1,000.00
• $1,040.00
• $943.40
• $1,060.00
28.
People refinance their home mortgages
Multiple Choice
• when rates rise.
• when rates fall and rise.
• when rates fall.
• whenever they need to, independent of rates.
29.
Loan amortization schedules show
Multiple Choice
• the principal balance paid per period only.
• the present value of the payments due.
• the interest paid per period only.
• both the principal balance and interest paid per period.
30.
When you get your credit card bill, it will offer a minimum payment, which
Multiple Choice
• usually only pays the principal and a small amount of accrued interest.
• usually only pays the accrued interest and no principal.
• usually only pays the principal and no accrued interest.
• usually only pays the accrued interest and a small amount of principal.
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Question 30 of 30 Total30 of
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