TVM CF

Time value of money indicates that

• A unit of money obtained today is worth more than a unit

  of money obtained in future

• A unit of money obtained today is worth less than a unit

  of money obtained in future

• There is no difference in the value of money obtained

  today and tomorrow

• None of the above

Time value of money supports the comparison of cash

flows recorded at different time period by

• Discounting all cash flows to a common point of time

• Compounding all cash flows to a common point of time

• Using either a or b

• None of the above

If the nominal rate of interest is 10% per annum and

there is quarterly compounding, the effective rate of

interest will be:

• 10% per annum

• 10.10 per annum

• 10.25%per annum

• 10.38% per annum

You deposit $x,000 in a savings account that pays x percent interest, compounded annually.  How much will your account be worth in 5 years? This question is solving for...

• FV of a single cash flow

• PV of a single cash flow

• Interest rate for a single cash flow

• FV of an annuity

You can earn x percent interest, compounded annually.  How much must you deposit today to withdraw $x0,000 in x years?

• FV of an annuity

• PV of an annuity

• FV of a sum

• PV of a single cash flow

Your uncle has agreed to deposit $x,000 in your brokerage account for the next 4 years.  You estimate that you can earn x percent a year on your investments.  How much will you have in your account four years from now? 

• FV under monthly compounding

• FV of annuity

• PV of a single payment

• FV of a single payment

Mr. Khaild will receive $x000 a year for the next 15 years from her trust.  If a 7 percent interest rate is applied, what is the current value of the future payments if the first receipt occurs one year from today?

• Present value of annuity

• Future value of annuity

• FV of a single cash flow

• PV of a single cash flow

If a 5-year ordinary annuity has a present value of $x000, and if the interest rate is x percent, what is the amount of each annuity payment? You are required to find the 'C'. True or false.

• True

• False

If a 5-year ordinary annuity has a present value of $x000, and if the interest rate is x percent, what is the amount of each annuity payment? Which formula are you going to use to find the 'C'?

• PV of single cash flow

• FV of single cash flow

• PV of annuity

• FV of annuity