Simple interest on a $15,000, 10%, 20-month note payable would total:

		$0
		$1,500
		$2,500
		$3,000

Question 3

Interest compounded on a $10,000 principal amount yearly at 1.5% for six years is:

		$900
		$934.42
		$1,800
		$3,600

Question 4

Mr. Jackson desires to have $5,324 on deposit three years from today. If he has $4,000 to deposit, what rate of interest, compounded annually, must be obtained to accumulate the desired $5,324 in three years? The future value of one at 3 periods, 8%, 9%, 10% and 12% are given next, respectively: 1.25971, 1.295029, 1.33100, 1.404928. The present value of one at 3 periods, 8%, 9%, 10% and 12% are given respectively, 79383, .77218, .75132, and .71178.

		8%
		9%
		10%
		12%

Question 5

On April 1, year 1, the Lucky Company purchased a bulldozer. Payment, totaling $70,000 is not due until April 1, year 3. Assuming interest at a 12% annual rate, Lucky should debit Machinery on April 1, year 1, in the amount of: (present value of 1 factor for 2 years at 12% is: .797194; for 3 years is .71178, the future value of 1 factor for 2 years at 12% is: 1.25440; 3 years 1.40493).

		$70,000
		$62,500
		$61,600
		$55,804

Question 6

All of the following are conditions for an annuity, except for:

		Periodic cash flows must be equal in amount
		The time periods between the cash flows are the same length
		The interest rate is constant for each time period
		The interest rate is compounded at the middle of each time period

Question 7

Lori Miller deposits $2,000 each year into a savings account beginning January 1, 2010. The last payment will be made on January 1, 2019, after which the total amount will be withdrawn to purchase a yacht. To find the amount available on January 1, 2019, after the last payment, Lori must determine:

		the present value of an ordinary annuity
		the present value of a single sum
		the future value of an ordinary annuity
		the future value of a single sum

Question 8

The Smith Company desires to have on deposit $300,000 on January 2, 2023, to fund a major capital campaign beginning on that date. To accumulate the desired sum, Smith will make equal annual deposits on January 2, 2020, 2021, 2022 and 2023 in a fund that will earn 10% compounded annually. Smith must make four annual deposits of: (future value of an ordinary annuity of 10%, 4 periods is 4.64100, future value of 1 of 10%, 4 periods is 1.46410, and future value of an annuity due of 10% and 4 periods is 4.41632)

		$50,000
		$64,641
		$75,000
		$94,641

Question 9

Using the table approach, the future amount of an annuity due may be calculated by finding the table factor for the future amount of an ordinary annuity of:

		n+1 rents and then subtract 1
		n+1 rents and then add 1
		n-1 rents and then add 1
		n-1 rents and then subtract 1

Question 10

At the beginning of 2010, the Regal Company issued 10-year bonds with a face value of $10,000,000 due on December 31, 2019. The company will accumulate a fund to retire these bonds at maturity. It will make ten annual deposits to the fund beginning on December 31, 2010. How much must the company deposit each year, assuming that it will earn 12% interest compounded annually? (The future value of an ordinary annuity, 10 periods, and 12% is 17.548735 and for annuity due is 19.654583 and the present value of an ordinary annuity, 10 periods, 12% is 5.650223 and the annuity due is 6.328250)

		$508,787.18
		$565,022.30
		$569,841.64
		$909,090.90

Question 11

Which answer finishes the sentence started below... "The future amount of an annuity due is determined one period

		after the last rent in the series."
		before the next rent in the series."
		before the last rent in the series."
		after the next rent in the series."

Question 12

House of Flavors Ice Cream Parlor began depositing $1,000 equal annual deposits in a fund beginning on January 2, 2014. The fund earns 10% compounded annually and the last deposit is made on January 2, 2018. How much will be in the fund on January 2, 2019, one year after the final deposit? (future value of annuity due with 6 years, 10% is 8.487171 and with 5 years, 10% is 6.715610 and future value of an ordinary annuity with 6 years, 10% is 7.715610 and with 5 years, 10% is 6.105100)

		$7,500
		$6,716
		$6,105
		$5,641

Question 13

Hillary Jones wants to know how much she must deposit today at 12% interest to provide three equal annual withdrawals of $10,000, beginning one year from now. This is an example of the present value of:

		an ordinary annuity
		an annuity due
		a single sum
		a deferred annuity

Q 14.

In order to measure the proceeds from an issue of bonds, which of the following time value of money concepts must be calculated?

		Need to solve for the present value of an ordinary annuity and present value of 1
		Need to solve for the future amount of 1 and present value of an ordinary annuity
		Need to solve for the future amount of an ordinary annuity and future value of 1.
		Need to solve for the present value of an annuity due and present value of 1.

Question 15

On January 31, 2016, Carolina Company acquired a new machine by paying $20,000 cash down and agreeing to pay $10,000 annually for three years, beginning on January 31, 2017. Assuming an interest rate of 10%, Carolina should record the acquisition cost of the machine on January 31, 2016, at: (future value of an ordinary annuity for 3 periods at 10% is 3.310000 and annuity due is 3.641000 and present value of an ordinary annuity for 3 periods at 10% is 2.486852 and annuity due is 2.735537)

		$31,046
		$44,869
		$47,356
		$50,000

Question 16

On July 7, 2016, Luke Company sold some machinery to Jones Construction. The sales contract requires Jones Construction to pay five equal annual rents of $70,000 beginning on July 7, 2016. What time value concept is appropriate for this situation?

		present value of an annuity due of $1 for five periods
		present value of an ordinary annuity of $1 for five periods
		future amount of an annuity of $1 for five periods
		future amount of $1 for five periods

Question 17

Fred Fiddle has $2,000,000 on deposit in a fund that earns 10% interest compounded annually. How much can Fred annually draw out of the fund in ten equal annual withdrawals to completely deplete the fund after the tenth withdrawal, assuming the first withdrawal occurs today? (present value of an ordinary annuity with 10%, 10 periods is 6.144567 and annuity due is 6.759024. Future value of an ordinary annuity with 10%, 10 periods is 15.937425 and annuity due is 17.531167).

		$200,000.00
		$295,900.70
		$325,490.79
		$363,963.00