Q1:

Which of the following statements is FALSE about valuing cash at different points in time?

A.The equivalent value of two cash flows at two different points in time is sometimes referred to as the time value of money.

B.Finding the present value (PV) and compounding are the same.

C.If you want to compare or combine cash flows that occur at different points in time, you first need to convert the cash flows into the same units or move them to the same point in time.

D.A dollar today and a dollar in one year are not equivalent.

Q2:

If the current market rate of interest is 7%, then the future value (FV) of this stream of cash flows is closest to:

A.$11,476

B.$18,362

C.$5,738

D.$ 13,771

Q3:

An annuity pays $13 per year for 45 years. What is the future value (FV) of this annuity at the end of that 45 years given that the discount rate is 6%?

A.$3,871.94

B. $3,318.80

C.$1,659.40

D.$2,765.67

Q4:

Martin wants to provide money in his will for an annual bequest to whichever of his living relatives is oldest. That bequest will provide $4,000 in the first year, and will grow by 5% per year, forever. If the interest rate is 9%, how much must Martin provide to fund this bequest?

A.$120,000

B. $100,000

C.$80,000

D.$ 50,000

Consider the following timeline detailing a stream of cash flows: Date 0 2 3 4 $1000 $2000 $3000 $4000 ? Cash flow