5) If an individual's cost of capital were 6%, the person would prefer to receive $110 at the end of one year rather than $100 right now. 5) true false 6) An annuity is a series of consecutive payments of equal amount. 6) true false 7) Compounding more than once a year (semi-annually, quarterly, or monthly) will increase the interest rate and number of periods used in the calculations. 7) true false MULTIPLE CHOICE - Choose the one alternative that best completes the statement or answers the question. 8) If you invest $10,000 today at 10% interest, how much will you have in 10 years? 8) A) $13,860 B) $25,940 C) $3,860 D) $80,712 9) Pedro will invest $5,000 at the end of each year. If the interest rate is 8%, what will the value be after three years? 9) A) $12,885 B) $6,300 C) $16,230 D) $15,400 10) Beck borrowed $150,000 to buy a house. His loan cost was 16% annually because of his bad credit score. He promised to repay the loan in 5 years on a quarterly basis. How much are the quarterly payments? 10) A) $11,453 B) $45,811 C) $13,113 D) $11,038 11) A home buyer signed a 20 -year, 8% mortgage for $72,500. Given the following information, how much should the annual loan payments be? 11) A) $1,584 B) $7,384 C) $15.555 D) $15,588 12) The future value of a $500 investment today at 8% annual interest compounded semiannually for five years is 12) A) $805 B) $814 C) $740 D) $923 13) In determining the future value of a single amount, one must consider 13) A) the periodic payments at a given interest rate and time. B) the future value at a given interest rate and time. C) the future periodic payments discounted at a given interest rate and time. D) the present value at a given interest rate and time. 14) Sydney saved $10,000 during her first year of work after college and plans to invest it for her retirement in 20 years. How much will she have available for retirement if she can make 8% on her investment? 14) A) $2,150 B) $457,620 C) $46,610 D) $217,250 TRUE/FALSE - Write ' T ' if the statement is true and ' F ' if the statement is false. 1) p> The interest factor for the future value of a single sum is equal to (1+n)i,

1) true false 2) p> The interest factor for a future value (FVBF)isequalto(1+i)n 2) true false 3) p> The formula PV=FV(1+n) will determine the present value of $1.

3) true false 4) Present value is the opposite of the future value. 4) true false