"Time Value of Money - Test Your Knowledge!"

What does the Time Value of Money (TVM) mean?

• Money loses value only during inflation

• A dollar today is worth more than a dollar tomorrow

• All money grows automatically

• • Time does not affect money

Which of the following earns interest on both the principal and the accumulated interest?

• Simple Interest

• Discounting

• Compound Interest

• • Inflation

What is an ordinary annuity?

• Payment at the beginning of each period

• Payment at random times

• Payment at the end of each period

• Lump sum payment

Why is present value important in finance?

• It tells us how to spend money

• It helps compare the value of future money today

• It is used only in accounting

• It helps calculate taxes

What happens when the discount rate increases?

• Future value increases

• Present value decreases

• • Time value becomes irrelevant

• No effect

Find the future value of RM5,000 after 4 years at 6% annual interest (compounded annually):

• RM6,324.92

• RM6,000.00

• RM5,750.00

• RM7,200.00

What is the present value of RM10,000 to be received in 5 years at 8%? (Round to nearest RM)

• 6,806

• 6810

If you save RM1,000 yearly at 5% interest for 5 years, what is the future value?

• RM5,000

• RM5,525.63

• RM6,000

• RM4,800

Present value of RM2,000 annually for 6 years at 7% (ordinary annuity)?

• RM9,718

• RM9,720

You borrow RM12,000 to repay over 4 years with 10% interest. What is your annual installment?

• RM3,000

• RM3,415.68

• RM4,200

• RM2,800