1.If you set yourself a goal of investing X amount today, earning interest at 10%, in order to withdraw $32,321 at the end of each year for the next four years, how much is X?

$22,075

None of the other alternatives are correct

$102,454

$129,284

$10,196

2Your grand-mother puts $1,000 per year in a TD Bank account for you. She started doing this ten years ago to save for a big graduation trip after completion of high school and before starting university. Money is worth 12%. How much is sitting in the TD bank account as of now? Please round to the nearest whole number.

$17,549

$11,200

$10,000

$56,502

$3,016

3When a firm buys a machine and is offered the following terms ($250,000 payment in full now or ten monthly installments of $28,000), it should

Capitalize the asset at $250,000

Capitalize the asset at $280,000

None of the above

Capitalize the asset at $280,000 but offset this with a contra account for $28,000

Not capitalize the asset until it is fully paid for

Which of the following statements is true?

None of the other alternatives are correct

When time periods are short (less than one year) the time value of money is essential to consider

When time periods are short (less than one year) the time value of money is usually ignored

As time passes, the amount in the Discount account, which is the result of the present value being less than the amount which will ultimately be paid in the future, increases

Money grows linearly with compound interest

6Selden Co. purchases a factory and pays $5,000,000 cash and uses the factory to produce microchips and then a year later turns around and sells the building for the same amount it originally paid. (money is worth 8% compounded quarterly). Selden will record:

A gain on the sale

Not record this as a sale until payment in full is received

There is insufficient information to answer the question

A loss on the sale

Neither a gain nor a loss on the sale

7If you borrowed $1,000 for a 3 year period, with a simple interest rate of 10% per annum, the total interest to be paid would be

$500

$750

$1,000

$300

None of the other alternatives are correct

9

A non interest-bearing note that pays $5,000 three years from today is issued in exchange for used equipment. If the discount rate appropriate for such notes is 8% per annum, the entry to record the issue of a note for the used equipment on our books would include a:

Dr Discount on Note Payable $1,031

Dr Used Equipment $5,000

Cr Note Payable $3,969

Cr Discount on Note Payable $1,031

None of the other alternatives are correct

10.If you set yourself a goal of investing X amount today, earning interest at 15%, in order to withdraw $10,000 at the end of each year for the next two years, how much is X?

Between $12,000 and $15,000

None of the other alternatives are correct

$20,000

$21,500

$16,257