Time Value of Money

The future value of $100 received today and deposited at 6 percent for four years is

• $126

• $79

• $124

• $116

The present value of $200 to be received 10 years from today, assuming an opportunity cost of 10 percent is

• $120

• can't be determined

• $77

• $300

If a loan of 30,000 is to be paid in 5 annual installments with interest rate of 9% per annum, then the equal annual installment will be;

• can't be determined

• 7720.63

• 7,713.00

• 7713.26

Answer explanation

Clara wants to buy a car worth $25,000, 3 years from now. To accumulate the

$25,000, she needs to make equal annual end-of-year deposits into an account

paying annual interest of 5 percent. How much should the annual deposit be?

• 7,930

• 6,490

• 9,510

• 6,905

The amount money a person expects to have in the future is called

• Principal
• Future Value
• Simple Interest
• Present Value

Earning interest on interest is called

• Extra Interest
• Simple Interest
• Inflation Interest
• Compound Interest

A fast way to estimate how long it will take your savings to double with compound interest is known as

• 70-20-10 Rule
• Rule of 72

It is a series of equal payments at regular intervals.

• Interest

• Annuity

• Logic

• Proposition

Ordinary annuity is paid or received at the _______ of the time periods.

• beginning

• end

• middle

• quarter

Time‑value of money is based on the belief that a dollar that will be received at some future date is worth more than a dollar today.

• TRUE

• FALSE