16 You double your money in five years. The reason your return is not 20 percent per year is because: 4 oints Multiple Choice It does not reflect the effect of compounding. It does not reflect the effect of the Rule of 72. It does not reflect the effect of discounting. It is probably a "fad" Investment. 17 Determine the interest rate earned on a $450 deposit when $475 is paid back in one year. 8.4 points Multiple Choice 1.13 percent 13.0 percent 0.89 percent 5.56 percent 18 What is the future value of a $1,000 annuity payment over 4 years if the interest rates are 8 percent? B ints Multiple Choice $4,320.00 $4.506.11 $3,312.10 $9,214.20 19 What is the future value of an $800 annuity payment over 15 years if the interest rates are 6 percent? 3 pints Multiple Choice $1,917.25 $12,720.00 $18.620.78 $7,002.99 20 When moving from the left to the right of a time line, we are using 3.3 points Multiple Choice discounted cash flows to calculate present values. only payments to calculate future values. compound Interest to calculate future values. simple interest to calculate future values. 21 When saving for future expenditures, we can add the. of contributions over time to see what the total will be worth at some point in time. 3 ints Multiple Choice present value payment future value time value to money 22 Which of the following will increase the future value of an annuity? 3.3 points Multiple Choice The number of periods increases. The amount of the annulty Increases. The Interest rate increases. All of these choices are correct. 23 Your credit rating and current economic conditions will determine 3.1 points Multiple Choice whether you get simple or compound Interest how long discounting will affect you. the Interest rate that a lender will offer. how long compounding will affect you. 1 24 What is the present value of a $300 annuity payment over 5 years if interest rates are 8 percent? pints Multiple Choice $1,938.96 $204.17 $1,197.81 $440.80 25 What is the present value of a $600 annuity payment over 4 years if interest rates are 6 percent? 3.1 points Multiple Choice $475.26 $2.079.06 $3.145.28 $757.49 3.1 26 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? points Multiple Choice $5,619.52 $5,881.63 $5,769.06 $5,947.88 27 A perpetuity, a special form of annuity, pays cash flows 3.1 points Multiple Choice periodically forever. that do not have time value of money implications. and is not effected by Interest rate changes. continuously for one year. 28 A loan is offered with monthly payments and a 10 percent APR. What is the loan's effective annual rate (EAR)? 3.4 Boints Multiple Choice 12.67 percent 10.47 percent 11.20 percent 10.00 percent 29 A loan is offered with monthly payments and a 14.5 percent APR. What is the loan's effective annual rate (EAR)? 8.4 points Multiple Choice 15.63 percent 15.13 percent 15.50 percent 14.97 percent 30 People refinance their home mortgages 8.4 points Multiple Choice when rates rise. when rates fall. whenever they need to, Independent of rates. when rates fall and rise.