# Future and present value of a sum of money

These are questions that I cannot seem to find the answer to. Any sort of help would be greatly appreciated!

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Both the future and present value of a sum of money are based on?

Interest rate

Number of time periods

Both interest rate and number of time periods

None of the above mentioned

What is an annuity?

More than one payment

A series of unequal but consecutive payments

A series of equal and consecutive payments

A series of equal and non-consecutive payments

If you have $1000 and you plan to save it for 4 years with an interest rate of 10% what is the future value of your savings?

1464.00

1000.00

1331.00

Cannot be determined

Why is time value of money an important finance concept?

It takes risk into account

It takes time into account

It takes compound interest into account

All of the above mentioned

The present value of a dollar to be received in the future is

More than a dollar

Equal to a dollar

Less than a dollar

None of the above mentioned

In valuing a financial asset, you use these variables

Present value of future cash flows

Discount rate

Required rate of return

All of the above mentioned

The principal amount of a bond at issue is called

Par value

Coupon value

Present value of an annuity

Present value of a lump sum

If a bond's value rises above its par value during its life, interest rates have

Gone up

Gone down

Stayed the same

There is no correlation with interest rates

The basic "rent" that you are charged when you borrow money is called

Inflation premium

Risk premium

Real rate of return

None of the above mentioned

As time to maturity draws near, a bond's value approaches

Zero

Par

The coupon payment

None of the above mentioned

What focuses on long-term decision making regarding the acquisition of projects?

Working capital management

Capital budgeting

Cash budgeting

None of the above mentioned

Since capital budgeting uses cash flows instead of accounting flows, the financial manager must add back what to the analysis?

The cost of fixed assets

The cost of accounts payable

Investments

Depreciation

Which capital budgeting method focuses on firm liquidity?

Payback method

Net present value

Internal rate of return

None of the above mentioned

Which of the following capital budgeting methods states the return of a project as a percentage?

Payback period

Net present value

Internal rate of return

None of the above mentioned

Which of the following capital budgeting methods is the least theoretically correct?

Payback method

Net present value

Internal rate of return

None of the above mentioned

Who has a claim to the residual income of the firm?

Bondholders

Preferred stockholders

Common stockholders

None of the above mentioned

What voting elects a member of the board of directors of a firm with a 51% vote?

Cumulative

Preferred

Majority

None of the above mentioned

Which of the following types of voting includes minority shareholders?

Cumulative

Preferred

Majority

None of the above mentioned

If a corporate charter says that current stockholders must be give the first option to purchase new stock, what kind of rights offering is that?

Pre-emptive

Rights-on

Ex-rights

None of the above mentioned

When a rights offering is announced, the stock initially trades

Ex-rights

Rights-on

No-rights

Pre-emptive right

The Board of Directors may do which of the following with net income

Put it in the cash account

Retain it

Pay it out as dividends

Retain it and pay it out as dividends

One desire of stockholders regarding dividend policy is

Stable dividends

Frequent dividends

Low dividends

High Dividends

A stock dividend

Increases the value of stockholder's equity

Decreases the value of stockholder's equity

Does not change the value of stockholder's equity

None of the above mentioned

The purpose of a stock spilt is usually to

Increase the investor's wealth

Bring down the stock price into a lower trading range

Reduce the threat of takeover

Decrease the number of shares outstanding

As a result of the Jobs and Growth Tax Relief Act of 2003, dividends and capital gains are taxed at a maximum rate of

38.6%

20%

15%

None of the above rates

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#### Solution Preview

These are questions that I cannot seem to find the answer to. Any sort of help would be greatly appreciated!

---

Both the future and present value of a sum of money are based on?

Interest rate

Number of time periods

Both interest rate and number of time periods

None of the above mentioned

What is an annuity?

More than one payment

A series of unequal but consecutive payments

A series of equal and consecutive payments

A series of equal and non-consecutive payments

If you have $1000 and you plan to save it for 4 years with an interest rate of 10% what is the future value of your savings?

1464.00

1000.00

1331.00

Cannot be determined

Why is time value of money an important finance concept?

It takes risk into account

It takes time into account

It takes compound interest into account

All of the above mentioned

The present value of a dollar to be received in the future is

More than a dollar

Equal to a dollar

Less than a dollar

None of the above mentioned

In valuing a financial asset, you use these variables

Present value of ...

#### Solution Summary

This discusses the future and present value of a sum of money