Question 1

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? (PV of $1, FV of $1, PVA of $1, and FVA of $1)  (Use appropriate factor(s)  from the tables provided.)

Accepted Answer

A)   $55,606
B)   $350,000
C)   $222,425
D)   $137,681
E)   $265,764F) All of the above
G) A) and B)

Question 2

The present value of $5,000 per year for three years at 12% compounded annually is $12,009. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.)

Accepted Answer

A) True 
 B)False

Question 3

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?

Accepted Answer

The answer of A company is setting up a sinking...

Question 4

Clara is setting up a retirement fund, and she plans on depositing $5,000 per year in an investment that will pay 7% annual interest. How long will it take her to reach her retirement goal of $69,082? (PV of $1, FV of $1, PVA of $1, and FVA of $1)  (Use appropriate factor(s)  from the tables provided.)

Accepted Answer

A)   20 years
B)   13.816 years
C)   10 years
D)   0.072 years
E)   5 yearsF) B) and D)
G) B) and C)

Question 5

Cody invests $1,800 per year from his summer wages at a 4% annual interest rate. He plans to take a European vacation at the end of 4 years when he graduates from college. How much will he have available to spend on his vacation? (PV of $1, FV of $1, PVA of $1, and FVA of $1)  (Use appropriate factor(s)  from the tables provided.)

Accepted Answer

A)   $7,643.70
B)   $7,200.00
C)   $7,488.00
D)   $6,912.00
E)   $7,787.52F) A) and B)
G) A) and E)

Question 6

A 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?

Accepted Answer

$239,061

Question 7

An _ _ is a series of equal payments occurring at equal intervals.

Accepted Answer

The answer of An _ _ is a series of...

Question 8

Which interest rate column would you use from a present value or future value table for 8% interest compounded quarterly?

Accepted Answer

A)   2%
B)   12%
C)   1%
D)   6%
E)   3%F) A) and E)
G) C) and D)

Question 9

A company has $46,000 today to invest in a fund that will earn 4% compounded annually. How much will the fund contain at the end of 6 years? (PV of $1, FV of $1, PVA of $1, and FVA of $1)  (Use appropriate factor(s)  from the tables provided.)

Accepted Answer

A)   $62,582
B)   $47,840
C)   $57,040
D)   $58,075
E)   $58,204F) B) and E)
G) A) and E)

Question 10

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. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.)

Accepted Answer

A) True 
 B)False

Question 11

Giuliani Co. lends $524,210 to Craig Corporation. The terms of the loan require that Craig make six semiannual period-end payments of $100,000 each. What semiannual interest rate is Craig paying on the loan?

Accepted Answer

The answer of Giuliani Co. lends $524,210 to Craig Corporation....

Question 12

An individual is planning to set-up an education fund for her daughter. She plans to invest $7,000 annually at the end of each year. She expects to withdraw money from the fund at the end of 9 years and expects to earn an annual return of 8%. What will be the total value of the fund at the end of 9 years? (PV of $1, FV of $1, PVA of $1, and FVA of $1)  (Use appropriate factor(s)  from the tables provided.)

Accepted Answer

A)   $50,400
B)   $45,360
C)   $87,413
D)   $126,000
E)   $68,040F) D) and E)
G) B) and E)

Question 13

Marc Lewis 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? (PV of $1, FV of $1, PVA of $1, and FVA of $1)  (Use appropriate factor(s)  from the tables provided.)

Accepted Answer

A)   Five payments
B)   More than six payments
C)   Six payments
D)   Four payments
E)   Three paymentsF) A) and E)
G) All of the above

Question 14

A company needs to have $150,000 in 5 years, and will create a fund to insure that the $150,000 will be available. If it can earn a 6% return compounded annually, how much must the company invest in the fund today to equal the $150,000 at the end of 5 years? (PV of $1, FV of $1, PVA of $1, and FVA of $1)  (Use appropriate factor(s)  from the tables provided.)

Accepted Answer

A)   $112,095
B)   $141,000
C)   $105,000
D)   $100,000
E)   $45,000F) A) and E)
G) A) and D)

Question 15

Pelcher Company acquires a machine by issuing a note that requires semiannual payments of $4,000 for 3 years. The interest rate on the note is 10% compounded semiannually. What is the cost of the machine? (PV of $1, FV of $1, PVA of $1, and FVA of $1)  (Use appropriate factor(s)  from the tables provided.)

Accepted Answer

A)   $17,421.20
B)   $10,892.80
C)   $20,302.80
D)   $24,000.00
E)   $ 9.947.41F) C) and D)
G) None of the above

Question 16

Future value can be found if the interest rate (i), the number of periods (n), and the present value
(p) are known.

Accepted Answer

A) True 
 B)False  True

Question 17

The future value of an ________ annuity is the accumulated value of each annuity payment with interest as of the date of the final payment.

Accepted Answer

The answer of The future value of an ________ annuity...

Question 18

Marshall has received an inheritance and wants to invest a sum of money today that will yield $5,000 at the end of each of the next 10 years. Assuming he can earn an interest rate of 5% compounded annually, how much of his inheritance must he invest today? (PV of $1, FV of $1, PVA of $1, and FVA of $1)  (Use appropriate factor(s)  from the tables provided.)

Accepted Answer

A)   $45,125.00
B)   $100,000.00
C)   $47,500.00
D)   $38,608.50
E)   $50,000.00F) A) and B)
G) A) and C)

Question 19

Interest may be defined as:

Accepted Answer

A)   A borrower's payment to the owner of an asset for its use.
B)   The future value of a present amount.
C)   Always an asset.
D)   Always a liability.
E)   Time.F) All of the above
G) A) and B) A

Question 20

An annuity is a series of equal payments occurring at equal intervals.

Accepted Answer

A) True 
 B)False

Exam 26: Present and Future Values in Accounting

Correct Answer
verified

The present value of $5,000 per year for three years at 12% compounded annually is $12,009. (^PV^of^$1, ^FV^of^$1, ^PVA^of^$1, and ^FVA^of^$1) (Use appropriate factor(s) from the tables provided.)

Correct Answer
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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?

Correct Answer
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Correct Answer
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Correct Answer
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A 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?

Correct Answer
verified
$239,061

An _ _ is a series of equal payments occurring at equal intervals.

Correct Answer
verified

Which interest rate column would you use from a present value or future value table for 8% interest compounded quarterly?

Correct Answer
verified

A company has $46,000 today to invest in a fund that will earn 4% compounded annually. How much will the fund contain at the end of 6 years? (^PV^of^$1, ^FV^of^$1, ^PVA^of^$1, and ^FVA^of^$1) (Use appropriate factor(s) from the tables provided.)

Correct Answer
verified

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. (^PV^of^$1, ^FV^of^$1, ^PVA^of^$1, and ^FVA^of^$1) (Use appropriate factor(s) from the tables provided.)

Correct Answer
verified

Giuliani Co. lends $524,210 to Craig Corporation. The terms of the loan require that Craig make six semiannual period-end payments of $100,000 each. What semiannual interest rate is Craig paying on the loan?

Correct Answer
verified

Correct Answer
verified

Marc Lewis 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? (^PV^of^$1, ^FV^of^$1, ^PVA^of^$1, and ^FVA^of^$1) (Use appropriate factor(s) from the tables provided.)

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Future value can be found if the interest rate (i), the number of periods (n), and the present value (p) are known.

Correct Answer
verified
True

The future value of an ________ annuity is the accumulated value of each annuity payment with interest as of the date of the final payment.

Correct Answer
verified

Correct Answer
verified

Interest may be defined as:

Correct Answer
verified
A

An annuity is a series of equal payments occurring at equal intervals.

Correct Answer
verified

Exam 26: Present and Future Values in Accounting

Correct AnswerverifiedShow Answer

The present value of $5,000 per year for three years at 12% compounded annually is $12,009. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.)

Correct AnswerverifiedShow Answer

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?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A 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?

Correct Answerverified$239,061

An _ _ is a series of equal payments occurring at equal intervals.

Correct AnswerverifiedShow Answer

Which interest rate column would you use from a present value or future value table for 8% interest compounded quarterly?

Correct AnswerverifiedShow Answer

A company has $46,000 today to invest in a fund that will earn 4% compounded annually. How much will the fund contain at the end of 6 years? (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.)

Correct AnswerverifiedShow Answer

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. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.)

Correct AnswerverifiedShow Answer

Giuliani Co. lends $524,210 to Craig Corporation. The terms of the loan require that Craig make six semiannual period-end payments of $100,000 each. What semiannual interest rate is Craig paying on the loan?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Marc Lewis 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? (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.)

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Future value can be found if the interest rate (i), the number of periods (n), and the present value (p) are known.

Correct AnswerverifiedTrue

The future value of an ________ annuity is the accumulated value of each annuity payment with interest as of the date of the final payment.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Interest may be defined as:

Correct AnswerverifiedA

An annuity is a series of equal payments occurring at equal intervals.

Correct AnswerverifiedShow Answer

Correct Answer
verified

The present value of $5,000 per year for three years at 12% compounded annually is $12,009. (^PV^of^$1, ^FV^of^$1, ^PVA^of^$1, and ^FVA^of^$1) (Use appropriate factor(s) from the tables provided.)

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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$239,061

Correct Answer
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Correct Answer
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A company has $46,000 today to invest in a fund that will earn 4% compounded annually. How much will the fund contain at the end of 6 years? (^PV^of^$1, ^FV^of^$1, ^PVA^of^$1, and ^FVA^of^$1) (Use appropriate factor(s) from the tables provided.)

Correct Answer
verified

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. (^PV^of^$1, ^FV^of^$1, ^PVA^of^$1, and ^FVA^of^$1) (Use appropriate factor(s) from the tables provided.)

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Marc Lewis 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? (^PV^of^$1, ^FV^of^$1, ^PVA^of^$1, and ^FVA^of^$1) (Use appropriate factor(s) from the tables provided.)

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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True

Correct Answer
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Correct Answer
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Correct Answer
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A

Correct Answer
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