corporate finance - midterm 3

What is the concept of time value of money?

• Money today has no value compared to the same amount in the future

• Money today has the same value as the same amount in the future

• Money today is worth less than the same amount in the future

• Money today is worth more than the same amount in the future

Which formula is used to calculate the present value of a future sum of money?

• PV = FV / (1 + r)^n

• FV = PV / (1 + r)^n

• PV = FV * (1 + r)^n

• FV = PV * (1 + r)^n

What is the future value of an investment of PHP 50,000 for 5 years at an annual interest rate of 6%?

• PHP 84,088.96

• PHP 94,088.96

• PHP 64,088.96

• PHP 74,088.96

What does the concept of opportunity cost refer to?

• The cost of purchasing a new car

• The cost of forgoing one investment opportunity for another

• The cost of living in a different city

• The cost of borrowing money from a bank

What is the present value of PHP 100,000 to be received 3 years from now, assuming an annual interest rate of 5%?

• PHP 96,383.80

• PHP 86,383.80

• PHP 76,383.80

• PHP 66,383.80

What is the primary factor used in pricing a stream of tomorrow's cash flows?

• Annuities

• Discounting

• Compounding

• Opportunity Cost

What is the required annual interest rate to grow PHP 50,000 to PHP 70,000 in 4 years?

• 5.00%

• 7.72%

• 6.25%

• 8.50%

What is an annuity?

• A loan with variable interest rates

• A type of insurance policy

• A one-time payment

• A series of equal payments made at regular intervals

What is the future value of saving PHP 5,000 per month in a time deposit account with an annual interest rate of 4% after 3 years?

• PHP 191,580.80

• PHP 210,580.80

• PHP 200,580.80

• PHP 180,580.80

What is the formula for future value in the time value of money concept?

• FV = PV / (1 + r)^n

• FV = PV - (1 + r)^n

• FV = PV * (1 + r)^n

• FV = PV + (1 + r)^n