In determining the future value of a single amount, one meas
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1. In determining the future value of a single amount, one measures
A. the future value of periodic payments at a given interest rate.
B. the present value of an amount discounted at a given interest rate.
C. the future value of an amount allowed to grow at a given interest rate.
D. the present value of periodic payments at a given interest rate.
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1. In determining the future value of a single amount, one measures
A. the future value of periodic payments at a given interest rate.
B. the present value of an amount discounted at a given interest rate.
C. the future value of an amount allowed to grow at a given interest rate.
D. the present value of periodic payments at a given interest rate.
2. How much must you invest at 10% interest in order to see your investment grow to $5,000 in 5 years?
A. $3,070
B. $3,415
C. $3,105
D. $none of the above
FV = PV (1+i)n where PV is the present value
FV is the future value
i is the interest rate
n is the period
5,000 = PV(1 + 0.10)5
PV = 3,105
3. You are to receive $12,000 at the end of 5 years. The available yield on investments is 6%. Which table would you use to determine the value of that sum today?
A. Present value of an annuity of $1
B. Future value of an annuity
C. Present value of $1
D. Future value of $1
4. If you were to put $1,000 in the bank at 6% interest each year for the next ten years, which table would you use to find the ending balance in your account?
A. Present value of $1
B. Future value of $1
C. Present value of an annuity of $1
D. Future value of an annuity of $1
5. Mr. Blochirt is creating a college investment fund for his daughter. He will put in $850 per year for the next 15 years and expects to earn a 8% annual rate of return. How much money will his daughter have when she starts college?
A. $11,250
B. $12,263
C. $24,003
D. $23,079
FVA = W x (1 + i)n - 1 where FVA is the future value
i W is the amount required to deposit i is the interest rate
n is the period
FVA = 850 x (1 + 0.08)15 - 1
...
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