FIN/370T Finance For Business The Latest Version A+ Study Guide **********************************************
FIN 370T Entire Course Link http://www.onlinehelp123.com/FIN-370 ********************************************** FIN 370T Wk 2 – Apply: Homework If an average home in your town currently costs $300,000, and house prices are expected to grow at an average rate of 5 percent per year, what will an average house cost in 10 years? Multiple Choice • $507,593.74 • $488,688.39 • $483,153.01 • $450,000.00
We call the process of earning interest on both the original deposit and on the earlier interest payments Multiple Choice • discounting. • compounding. • multiplying. • computing.
What is the future value of $1,000 deposited for one year earning 5 percent interest rate annually? Multiple Choice
• $1,000 • $2,050 • $1,005 • $1,050
When your investment compounds, your money will grow in a(n) __________ fashion. Multiple Choice • static • linear • exponential • implied
An average home in Chicago costs $295,000. If house prices are expected to grow at an average rate of 3 percent per year, what will a house cost in five years? Multiple Choice • $338,941.27 • $341,985.85 • $347,028.19 • $328,995.61
Which of the following statements is incorrect with respect to time lines? Multiple Choice • A helpful tool for organizing our analysis is the time line. • Interest rates are not included on our time lines. • Cash flows we receive are called inflows and denoted with a positive number.
• Cash flows we pay out are called outflows and designated with a negative number.
What is the future value of $2,500 deposited for one year earning a 14 percent interest rate annually? Multiple Choice • $2,550 • $3,150 • $2,850 • $2,950
Compute the present value of $9,000 paid in four years using the following discount rates: 4 percent in year 1, 5 percent in year 2, 4 percent in year 3, and 3 percent in year 4. rev: 10_14_2017_QC_CS-105529 Multiple Choice • $8,543.26 • $9,000.00 • $10,823.01 • $7,693.95
What is the present value of a $500 payment made in four years when the discount rate is 8 percent? Multiple Choice • $367.51 • $365.35 • $680.24 • $460.00
How are present values affected by changes in interest rates? Multiple Choice • The lower the interest rate, the larger the present value will be. • The higher the interest rate, the larger the present value will be. • Present values are not affected by changes in interest rates. • One would need to know the future value in order to determine the impact.
What is the present value of a $600 payment in one year when the discount rate is 8 percent? Multiple Choice • $555.56 • $525.87 • $498.61 • $575.09
Approximately how many years does it take to double a $500 investment when interest rates are 4 percent per year? Multiple Choice • 6.94 years • 0.06 year • 18 years • 6 years
Approximately what interest rate is needed to double an investment over eight years? Multiple Choice • 12 percent • 8 percent
• 100 percent • 9 percent
Approximately what rate is needed to double an investment over five years? Multiple Choice • 15.8 percent • 12.2 percent • 14.4 percent • 8 percent
Determine the interest rate earned on a $500 deposit when $650 is paid back in one year. Multiple Choice • 77.0 percent • 1.30 percent • 0.77 percent • 30.0 percent
Determine the interest rate earned on a $1,500 deposit when $1,680 is paid back in one year. Multiple Choice • 1.12 percent • 89.00 percent • 12.00 percent • 0.89 percent
Determine the interest rate earned on an $800 deposit when $808 is paid back in one year. Multiple Choice
• 10 percent • 15 percent • 1 percent • 100 percent
In order to discount multiple cash flows to the present, one would use Multiple Choice • the appropriate tax rate. • the appropriate compound rate. • the appropriate simple rate. • the appropriate discount rate.
Which of the following will increase the future value of an annuity? Multiple Choice • The number of periods increases. • The amount of the annuity increases. • The interest rate increases. • All of these choices are correct.
Level sets of frequent, consistent cash flows are called Multiple Choice • loans. • annuities. • budgets. • bills.
When saving for future expenditures, we can add the ________ of contributions over time to see what the total will be worth at some point in time. Multiple Choice • time value to money • payment • future value • present value
What is the future value of a $1,000 annuity payment over 4 years if the interest rates are 8
percent? Multiple Choice • $4,320.00 • $3,312.10 • $9,214.20 • $4,506.11
If the future value of an ordinary, 11-year annuity is $5,575 and interest rates are 5.5 percent, what is the future value of the same annuity due? Multiple Choice • $5,947.88 • $5,769.06 • $5,881.63 • $5,619.52
What is the present value of a $1,100 payment made every year forever when interest rates are 4.5 percent? Multiple Choice • $24,444.44 • $21,089.37 • $11,100 • $22,963.14
What is the present value of a $775 annuity payment over six years if interest rates are 11 percent? Multiple Choice • $3,017.84 • $3,202.92 • $3,119.67 • $3,278.67
If the present value of an ordinary, 10-year annuity is $25,000 and interest rates are 7 percent, what is the present value of the same annuity due? Multiple Choice • $24,997.51 • $26,750.00 • $25,000.00 • $23,644.49
Many people who want to start investing for their future want to start today, which implies an
annuity stream that is paid at the beginning of the period. Beginning-of-period cash flows are referred to as Multiple Choice • ordinary annuities. • perpetuities. • present values. • annuities due.
Compounding monthly versus annually causes the interest rate to be effectively higher, and thus the future value Multiple Choice • is independent of the monthly compounding. • grows. • is affected only if the calculation involves an annuity due. • decreases.
When you get your credit card bill, it will offer a minimum payment, which Multiple Choice • usually only pays the accrued interest and a small amount of principal. • usually only pays the accrued interest and no principal. • usually only pays the principal and no accrued interest. • usually only pays the principal and a small amount of accrued interest.
A loan is offered with monthly payments and a 10 percent APR. What is the loan's effective annual rate (EAR)? Multiple Choice • 12.67 percent • 11.20 percent • 10.00 percent • 10.47 percent