CACF 340 - Assignment 1

Which has more value?

• $500 today

• $500 in 5 years

• Depends

• It will be the same

In the real-world analogy, money 'expires' in value when:

• it is physically destroyed.

• it is not invested or saved properly.

• it is exchanged for goods and services.

• it is kept in a bank account.

Which formula calculates Future Value?

• FV = PV * (1 + i)^n

• FV = PV / (1 + i)^n

• FV = PV * i * n

• FV = PV + (i * n)

Using the Rule of 72, at 8% return, your money doubles every __ years?

• 9

• 8

• 10

• 12

Which graph shows compounding growth?

• 
• 

What is the present value (PV) of $1,500 received in 3 years at an interest rate of 5%?

• $1,295

• $1,200

• $1,350

• $1,400

Which earns more?

• 5% simple

• 5% compound

• Same

Higher interest rates always decrease present value?

• True

• False

Choose between $10,000 now or $11,500 in 5 years at 4%

• $10,000 today

• $11,500 later

What is the best TVM for retirement

• Start at 25, with a little amount of money

• Start at 35, when you start to earn more money

• Start at 50, when you have a lot of money

• Doesn't matter