WorksheetsCorp Finance 2022
Total questions: 11
Worksheet time: 7mins
The time value of money is based on the belief that people have a positive time preference for consumption.
true
false
Not clear
The value of a dollar invested at a positive interest rate grows over time but at a slower rate further into the future.
true
false
not clear
The higher the rate of interest, the more likely you will elect to invest your funds and forgo current consumption.
false
not clear
true
The future value technique uses discounting to find the future value of each cash flow at the end of a project's life.
Not always
false
true
Compound interest consists of both simple interest and interest on interest.
true
false
no answer
Justin Bieber would like to buy a condo in Florida in six years. He is looking to invest $75,000 today in a stock that is expected to earn a return of 18.3 percent annually. How much will he have at the end of six years? (Round to the nearest dollar.)
250.657
310.585
205.574
310.684
Your friend has asked you to help him to choose an investment. He has EUR 6,000 to invest today for a period of two years. You identify a bank CD that pays an interest rate of 10.0 percent with the interest being paid quarterly. What will be the value of the investment in two years?
7310
8415
7221
8021
Which of the following statements is true?
A)
The value of a dollar invested at a positive interest rate decreases over time.
A dollar in hand today is worth less than a dollar to be received in the future.
The further in the future you receive a dollar, the less it is worth today.
The higher the rate of interest, the more likely an investor will elect to consume at present and forgo invest his funds.
Which of the following equations is used to compute the future value for continuous compounding?
FV∞ = PV × e i × n
FV∞ = PV ÷ e i × n
FV∞ = ei ÷ PV
FV∞ = ei × PV
When discount rate:
increases, the present value of a future cash flow decreases.
increases, the present value of a future cash flow increases.
decreases, the present value of a future cash flow will remain the same.
decreases, the present value of a future cash flow decreases.
Angelina and Brad Peach plan to buy a time-share in twenty years of SGD21,000. In order to have adequate funds to do so, the Peach want to make a deposit to their money market fund today. Assume that they will be able to earn an investment rate of 4%, compounded annually. How much will Angelina and Brad need to deposit today to achieve their goal? (Round off to the nearest dollar.)
8874.35
8810.11
9917
9584
