Time Value of Money Quiz

What would the future value of $100 be after 5 years at 10% compound interest?

• $161.05

• $134.54

• $127.84

• $151.29

• $143.65

Suppose you have $2,000 and plan to purchase a 3-year certificate of deposit (CD) that pays 4% interest, compounded annually. How much will you have when the CD matures?

• $2,324.89

• $2,591.45

• $2,249.73

• $2,011.87

• $2,854.13

A company's 2005 sales were $100 million. If sales grow at 8% per year, how large will they be 10 years later, in 2015, in millions?

• $190.49

• $225.54

• $188.32

• $201.15

• $215.89

How much would $1, growing at 5% per year, be worth after 100 years?

• $141.05

• $131.50

• $164.52

• $144.50

• $155.94

Suppose a U.S. government bond promises to pay $2,249.73 three years from now. If the going interest rate on 3-year government bonds is 6%, how much is the bond worth today?

• $2,011.87

• $2,591.45

• $2,324.89

• $1,888.92

• $2,854.13

How much would $10,000 due in 100 years be worth today if the discount rate were 10%?

• $0.73

• $1.21

• $2.49

• $4.83

• $6.30

Suppose a U.S. government bond will pay $1,000 three years from now. If the going interest rate on 3-year government bonds is 4%, how much is the bond worth today?

• $943.46

• $991.43

• $889.00

• $907.91

• $968.40

The U.S. Treasury offers to sell you a bond for $613.81. No payments will be made until the bond matures 10 years from now, at which time it will be redeemed for $1,000. What interest rate would you earn if you bought this bond at the offer price?

• 5.91%

• 6.71%

• 7.10%

• 5.59%

• 5.00%

Sims Inc. earned $1.00 per share in 2000. Five years later, in 2005, it earned $2.00. What was the growth rate in Sims' earnings per share (EPS) over the 5-year period?

• 10.82%

• 14.87%

• 13.61%

• 14.28%

• 12.17%

How long would it take $100 to double if it were invested in a bank that pays 5% per year?

• 15.27 years

• 10.49 years

• 11.34 years

• 13.91 years

• 14.21 years