QUESTION 1 Time line is useful in time value of money problems because it helps visualize and set up the problem True False QUESTION 2 Assume that you purchase a 6 year, 8 percent savings certificate for $1,000 If interest is compounded annually, what will be the value of the certificate when it matures Hint What is the future value of $1000 in 6 years at 8 $630 17 $1,469 33 $1,677 10 $1,586 87 $1,766 33 QUESTION 3 Calculate the present value of $1,000 to be received at the end of 8 years, interest rate is 7 $582 01 $1,718 19 $531 82 $5,971 30 $649 37 QUESTION 4 You want to have $200 in your account in five years' time The account will earn 8 compounded annually How much should you deposit today, i e , what is the present value of that amount today Just show the equation 200 (1 08) 5 200(1 08) 5 200(1 05) 8 (200 05) 8 200x05x8 QUESTION 5 If you have a choice between $1000 today or $2000 in five years at 15 percent, compounded annually, you should take the $1000 today since it is worth more Hint Compare apples to apples, either compare PV to PV or FV to FV True False QUESTION 6 An is an equal amount received at the of the period for a specified time period annuity due, end annuity due, beginning ordinary annuity, beginning ordinary annuity, middle None of the above QUESTION 7 How much would you be willing to pay today for an investment that would return $800 each year at the end of each of the next 6 years Interest rate of 5 percent, compounded annually Hint Find PV of annuity $5,441 53 $4,800 00 $3,369 89 $4,060 55 $4,632 37 QUESTION 8 Assume you took a loan today for $10,000 at 10 interest, compounded annually You plan to make seven end of year payments Your payment should be $2,054 05 $1,867 32 $1,000 00 $1,428 57 Cannot be determined QUESTION 9 You decide to begin saving toward the purchase of a new car in 5 years If you put $1,000 at the end of each of the next 5 years in a savings account paying 6 percent compounded annually, how much will you accumulate after 5 years Hint first payment is one year from today, totaling five payments Find FV $6,691 13 $5,637 09 $1,338 23 $5,975 33 $5,732 00 QUESTION 10 You decide to begin saving toward the purchase of a new car in 5 years If you put $1,000 at the beginning of each of the next 5 years in a savings account paying 6 percent compounded annually, how much will you accumulate after 5 years Hint first payment is today, totaling five payments Find FV $6,691 13 $5,637 09 $1,338 23 $5,975 33 $5,732 00

The Answer is in the image, click to view ...

Answered step by step

Verified Expert Solution

Link Copied!

Question

1 Approved Answer

Posted on Jun 09, 2024

QUESTION 1

Time line is useful in time value of money problems because it helps visualize and set up the problem.
True
False

QUESTION 2

Assume that you purchase a 6-year, 8 percent savings certificate for $1,000.If interest is compounded annually, what will be the value of the certificate when it matures? Hint: What is the future value of $1000 in 6 years at 8%
$630.17
$1,469.33
$1,677.10
$1,586.87
$1,766.33

QUESTION 3

Calculate the present value of $1,000 to be received at the end of 8 years, interest rate is 7%.
$582.01
$1,718.19
$531.82
$5,971.30
$649.37

QUESTION 4

You want to have $200 in your account in five years' time. The account will earn 8% compounded annually. How much should you deposit today, i.e., what is the present value of that amount today? Just show the equation.
200/(1.08)⁵
200(1.08)⁵
200(1.05)⁸
(200.05)₈
200x05x8

QUESTION 5

If you have a choice between $1000 today or $2000 in five years at 15 percent, compounded annually, you should take the $1000 today since it is worth more. Hint: Compare apples to apples, either compare PV to PV or FV to FV.
True
False

QUESTION 6

An __________ is an equal amount received at the __________ of the period for a specified time period.
annuity due, end
annuity due, beginning
ordinary annuity, beginning
ordinary annuity, middle
None of the above

QUESTION 7

How much would you be willing to pay today for an investment that would return $800 each year at the end of each of the next 6 years?Interest rate of 5 percent, compounded annually. Hint: Find PV of annuity.
$5,441.53
$4,800.00
$3,369.89
$4,060.55
$4,632.37

QUESTION 8

Assume you took a loan today for $10,000 at 10% interest, compounded annually. You plan to make seven end of year payments. Your payment should be ______.
$2,054.05
$1,867.32
$1,000.00
$1,428.57
Cannot be determined

QUESTION 9

You decide to begin saving toward the purchase of a new car in 5 years.If you put $1,000 atthe endof each of the next 5 years in a savings account paying 6 percent compounded annually, how much will you accumulate after 5 years? [Hint: first payment is one year from today, totaling five payments. Find FV]
$6,691.13
$5,637.09
$1,338.23
$5,975.33
$5,732.00

QUESTION 10

You decide to begin saving toward the purchase of a new car in 5 years.If you put $1,000 atthe beginningof each of the next 5 years in a savings account paying 6 percent compounded annually, how much will you accumulate after 5 years? [Hint: first payment is today, totaling five payments. Find FV]
$6,691.13
$5,637.09
$1,338.23
$5,975.33
$5,732.00