Accy 111- Ch 6 Part 3

14 Questions | Total Attempts: 251

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Accy 111- Ch 6 Part 3

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Questions and Answers
  • 1. 
    Present and future value tables of $1 at 3% are presented below: NFV $1PV $1FVA $1PVA $1FVAD $1PVAD $111.030000.970871.00000.970871.03001.0000021.060900.942602.03001.913472.09091.9708731.092730.915143.09092.828613.18362.9134741.125510.888494.18363.717104.30913.8286151.159270.862615.30914.579715.46844.7171061.194050.837486.46845.417196.66255.5797171.229870.813097.66256.230287.89236.4171981.266770.789418.89237.019699.15917.2302891.304770.7664210.15917.7861110.46398.01969101.343920.7440911.46398.5302011.80788.78611111.384230.7224212.80789.2526213.19209.53020121.425760.7013814.19209.9540014.617810.25262131.468530.6809515.617810.6349616.086310.95400141.512590.6611217.086311.2960717.598911.63496151.557970.6418618.598911.9379419.156912.29607161.604710.6231720.156912.5611020.761612.93794  Today Thomas deposited $130,000 in a 2-year, 12% CD that compounds quarterly. What is the maturity value of the CD?
    • A. 

      164,680

    • B. 

      224,694

    • C. 

      137,800

    • D. 

      240,686

  • 2. 
    Present and future value tables of $1 at 3% are presented below: NFV $1PV $1FVA $1PVA $1FVAD $1PVAD $111.030000.970871.00000.970871.03001.0000021.060900.942602.03001.913472.09091.9708731.092730.915143.09092.828613.18362.9134741.125510.888494.18363.717104.30913.8286151.159270.862615.30914.579715.46844.7171061.194050.837486.46845.417196.66255.5797171.229870.813097.66256.230287.89236.4171981.266770.789418.89237.019699.15917.2302891.304770.7664210.15917.7861110.46398.01969101.343920.7440911.46398.5302011.80788.78611111.384230.7224212.80789.2526213.19209.53020121.425760.7013814.19209.9540014.617810.25262131.468530.6809515.617810.6349616.086310.95400141.512590.6611217.086311.2960717.598911.63496151.557970.6418618.598911.9379419.156912.29607161.604710.6231720.156912.5611020.761612.93794  Carol wants to invest money in a 6% CD account that compounds semiannually. Carol would like the account to have a balance of $90,000 8 years from now. How much must Carol deposit to accomplish her goal?
    • A. 

      $58,691

    • B. 

      $70,890

    • C. 

      $54,035

    • D. 

      $56,085

  • 3. 
    Present and future value tables of $1 at 3% are presented below: NFV $1PV $1FVA $1PVA $1FVAD $1PVAD $111.030000.970871.00000.970871.03001.0000021.060900.942602.03001.913472.09091.9708731.092730.915143.09092.828613.18362.9134741.125510.888494.18363.717104.30913.8286151.159270.862615.30914.579715.46844.7171061.194050.837486.46845.417196.66255.5797171.229870.813097.66256.230287.89236.4171981.266770.789418.89237.019699.15917.2302891.304770.7664210.15917.7861110.46398.01969101.343920.7440911.46398.5302011.80788.78611111.384230.7224212.80789.2526213.19209.53020121.425760.7013814.19209.9540014.617810.25262131.468530.6809515.617810.6349616.086310.95400141.512590.6611217.086311.2960717.598911.63496151.557970.6418618.598911.9379419.156912.29607161.604710.6231720.156912.5611020.761612.93794  Shane wants to invest money in a 6% CD account that compounds semiannually. Shane would like the account to have a balance of $100,000 3.5 years from now. How much must Shane deposit to accomplish his goal?
    • A. 

      $81,824

    • B. 

      $81,309

    • C. 

      $21,000

    • D. 

      $87,809

  • 4. 
    Present and future value tables of $1 at 3% are presented below: NFV $1PV $1FVA $1PVA $1FVAD $1PVAD $111.030000.970871.00000.970871.03001.0000021.060900.942602.03001.913472.09091.9708731.092730.915143.09092.828613.18362.9134741.125510.888494.18363.717104.30913.8286151.159270.862615.30914.579715.46844.7171061.194050.837486.46845.417196.66255.5797171.229870.813097.66256.230287.89236.4171981.266770.789418.89237.019699.15917.2302891.304770.7664210.15917.7861110.46398.01969101.343920.7440911.46398.5302011.80788.78611111.384230.7224212.80789.2526213.19209.53020121.425760.7013814.19209.9540014.617810.25262131.468530.6809515.617810.6349616.086310.95400141.512590.6611217.086311.2960717.598911.63496151.557970.6418618.598911.9379419.156912.29607161.604710.6231720.156912.5611020.761612.93794  Bill wants to give Maria a $550,000 gift in 6.5 years. If money is worth 6% compounded semiannually, what is Maria's gift worth today? Your Answer:
    • A. 

      $374,523

    • B. 

      $373,128

    • C. 

      $547,250

    • D. 

      $376,048

  • 5. 
    Present and future value tables of $1 at 3% are presented below: NFV $1PV $1FVA $1PVA $1FVAD $1PVAD $111.030000.970871.00000.970871.03001.0000021.060900.942602.03001.913472.09091.9708731.092730.915143.09092.828613.18362.9134741.125510.888494.18363.717104.30913.8286151.159270.862615.30914.579715.46844.7171061.194050.837486.46845.417196.66255.5797171.229870.813097.66256.230287.89236.4171981.266770.789418.89237.019699.15917.2302891.304770.7664210.15917.7861110.46398.01969101.343920.7440911.46398.5302011.80788.78611111.384230.7224212.80789.2526213.19209.53020121.425760.7013814.19209.9540014.617810.25262131.468530.6809515.617810.6349616.086310.95400141.512590.6611217.086311.2960717.598911.63496151.557970.6418618.598911.9379419.156912.29607161.604710.6231720.156912.5611020.761612.93794
    • A. 

      $19,302.

    • B. 

      $20,031

    • C. 

      $20,559

    • D. 

      $19,050

  • 6. 
    Present and future value tables of $1 at 3% are presented below: NFV $1PV $1FVA $1PVA $1FVAD $1PVAD $111.030000.970871.00000.970871.03001.0000021.060900.942602.03001.913472.09091.9708731.092730.915143.09092.828613.18362.9134741.125510.888494.18363.717104.30913.8286151.159270.862615.30914.579715.46844.7171061.194050.837486.46845.417196.66255.5797171.229870.813097.66256.230287.89236.4171981.266770.789418.89237.019699.15917.2302891.304770.7664210.15917.7861110.46398.01969101.343920.7440911.46398.5302011.80788.78611111.384230.7224212.80789.2526213.19209.53020121.425760.7013814.19209.9540014.617810.25262131.468530.6809515.617810.6349616.086310.95400141.512590.6611217.086311.2960717.598911.63496151.557970.6418618.598911.9379419.156912.29607161.604710.6231720.156912.5611020.761612.93794  Shelley wants to cash in her winning lottery ticket. She can either receive five, $190,000 semiannual payments starting today, or she can receive a lump-sum payment now based on a 6% annual interest rate. What is the equivalent lump-sum
    • A. 

      $896,249

    • B. 

      $725,931

    • C. 

      $727,436

    • D. 

      $905,758

  • 7. 
    Present and future value tables of $1 at 3% are presented below: NFV $1PV $1FVA $1PVA $1FVAD $1PVAD $111.030000.970871.00000.970871.03001.0000021.060900.942602.03001.913472.09091.9708731.092730.915143.09092.828613.18362.9134741.125510.888494.18363.717104.30913.8286151.159270.862615.30914.579715.46844.7171061.194050.837486.46845.417196.66255.5797171.229870.813097.66256.230287.89236.4171981.266770.789418.89237.019699.15917.2302891.304770.7664210.15917.7861110.46398.01969101.343920.7440911.46398.5302011.80788.78611111.384230.7224212.80789.2526213.19209.53020121.425760.7013814.19209.9540014.617810.25262131.468530.6809515.617810.6349616.086310.95400141.512590.6611217.086311.2960717.598911.63496151.557970.6418618.598911.9379419.156912.29607161.604710.6231720.156912.5611020.761612.93794  Jose wants to cash in his winning lottery ticket. He can either receive seven, $6,000 semiannual payments starting today, or he can receive a lump-sum payment now based on a 6% annual interest rate. What would be the lump-sum payment?
    • A. 

      $37,382

    • B. 

      $35,661

    • C. 

      $36,782

    • D. 

      $38,503

  • 8. 
    Present and future value tables of 1 at 11% are presented below. PV ofFV ofPVA of FVA of    $1$1        $1       $11.900901.11000.900901.00002.811621.232101.712522.11003.731191.367632.443713.34214.658731.518073.102454.70975.593451.685063.695906.22786.534641.870414.230547.9129  Spielberg Inc. signed a $190,000 noninterest-bearing note due in five years from a production company eager to do business. Comparable borrowings have carried an 11% interest rate. At what amount should this debt be valued at its inception?
    • A. 

      $210,900

    • B. 

      $190,000

    • C. 

      $112,755

    • D. 

      $101,582

  • 9. 
    Present and future value tables of 1 at 11% are presented below. PV ofFV ofPVA of FVA of    $1$1        $1       $11.900901.11000.900901.00002.811621.232101.712522.11003.731191.367632.443713.34214.658731.518073.102454.70975.593451.685063.695906.22786.534641.870414.230547.9129  Polo Publishers purchased a multi-color offset press with terms of $55,000 down and a noninterest-bearing note requiring payment of $40,000 at the end of each year for five years. The interest rate implicit in the purchase contract is 11%. Polo would record the asset at:
    • A. 

      $202,836

    • B. 

      $95,000

    • C. 

      $203,274

    • D. 

      $147,836

  • 10. 
    A series of equal periodic payments that starts more than one period after the agreement is called:
    • A. 

      Annuity due

    • B. 

      Ordinary due

    • C. 

      Future annuity

    • D. 

      Deferred selected

  • 11. 
    Yamaha Inc. hires a new chief financial officer and promises to pay him a lump sum bonus four years after he joins the company. The new CFO insists that the company invest an amount of money at the beginning of each year in a 7% fixed rate investment fund to insure the bonus will be available. To determine the amount that must be invested each year, a computation must be made using the formula for:
    • A. 

      Future value of a deferred annuity

    • B. 

      Future value of an ordinary annuity

    • C. 

      Future value of an annuity

    • D. 

      None of these is correct

  • 12. 
    Zulu Corporation hires a new chief executive officer and promises to pay her a signing bonus of $2 million per year for 10 years, starting five years after she joins the company. The liability for this bonus when the CEO is hired:
    • A. 

      Is the present value of a deferred annuity.

    • B. 

      Is zero because no cash is owed for five years

    • C. 

      Is the present value of an annuity due

    • D. 

      Is $20 million.

  • 13. 
    Which of the following must be known to compute the interest rate paid from financing an asset purchase with an annuity?
    • A. 

      Fair value of the asset purchased, number and dollar amount of the annuity payments.

    • B. 

      Fair value of the asset and timing of the annuity payments.

    • C. 

      Number of annuity payments and future value of the annuity.

    • D. 

      Present value of the annuity, dollar amount and timing of the annuity payments.

  • 14. 
    Loan C has the same principal amount, payment amount and maturity date as Loan D. However, Loan C is structured as an annuity due while Loan D is structured as an ordinary annuity. Loan C's interest rate is:
    • A. 

      Higher than Loan D.

    • B. 

      The same as Loan D.

    • C. 

      Indeterminate compared to Loan D

    • D. 

      Less than Loan D.