Finance 325 Exam 1 Newest Exam 2026 | FIN 325
Exam 1 | All Questions and Correct Answers |
Verified Answers | Graded A+
If you deposit $4,000 today in an account paying 11% per year. How much will
you have in 5 years? ------------Correct Answer--------------------FVt = PV * (1 + r)t
so
FV5 = $4,000 * (1+.11)5
FV5 =
Using TVM:
PV = -4000 , r(I/Y) = .11 , t(N) = 5
FV = $?
Suppose you invest $2,000 in ABC stock today. ABC stock does not pay any
dividends, but you expect to earn an annual return of 7% per year. What will be
the value of your investment in 8 years?
PV=
I/Y=
N=
FV= ------------Correct Answer--------------------FV = $2633.62
Suppose you need $25,000 in 4 years for a down payment on a house. If you can
earn 7.5% on your money, how much do you need today?
,FV=
I/Y=
N=
PV= ------------Correct Answer--------------------PV = $21,576.83
What is the present value of $500 to be received in 10 years? Assume the
appropriate discount rate is 3%.
FV=
I/Y=
N=
PV= ------------Correct Answer--------------------PV = $372.05
Suppose GM Corporation promises to pay all its employees a bonus of $100 in 2
years. GM has about 173,000 employees. What is the present value of that
obligation, assuming an appropriate discount rate of 5% per year?
FV=
I/Y=
N=
PV= ------------Correct Answer--------------------FV of obligation = 173,000*100 =
17,300,000
PV = $15,691,609.98
,Suppose you deposit $5000 today in an account paying r percent per year. If you
will get $10,000 in 10 years, what rate of return are you being offered?
FV=
I/Y=
N=
PV= ------------Correct Answer--------------------r(I/Y) = 7.18%
Suppose you plan to buy a house in 5 years. You estimate you will need a down
payment of $40,000. If you currently have $25,000, what annual rate of interest
must you earn to have enough for a down payment?
FV=
I/Y=
N=
PV= ------------Correct Answer--------------------r(I/Y) = 9.86%
Suppose we invest $5,000 in a security earning 8% per year. Determine how many
years it will take for the investment to be worth $10,000.
FV=
I/Y=
N=
PV= ------------Correct Answer--------------------N = 9.01 years
, Suppose you have $2000. You would like to buy a new mountain bike, but the
bike you have in mind costs $3500. If you can earn 6% per year, how long until
you can afford the bike you want?
FV=
I/Y=
N=
PV= ------------Correct Answer--------------------N = 9.6 years
Suppose you invest $500 today, $1000 at the end of one year, $2000 at the end of
the second year, and $3000 at the end of the third year. If your investment pays
6% interest per year, how much will you have at the end of four years? ------------
Correct Answer--------------------
=500*(1.06)^4+1000*(1.06)^3+2000*(1.06)^2+3000*1.06 = $7,249.45
Suppose you plan to invest $500 in a CD at the end of every year for 4 years. The
CD pays 5% per year. How much will you have accumulated at the end of the 4
years?
FVannuity = C x [(1+r)t - 1]/r ------------Correct Answer--------------------FV =
$2,155.06
Suppose we have an investment opportunity that promises to pay us $500 at the
end of one year, $1000 at the end of two years, and $1500 at the end of three
years. If our discount rate is 12% per year, what is the present value of this
investment opportunity?
PV =$500/(1+.12)1 + $1000/(1+.12)2
Exam 1 | All Questions and Correct Answers |
Verified Answers | Graded A+
If you deposit $4,000 today in an account paying 11% per year. How much will
you have in 5 years? ------------Correct Answer--------------------FVt = PV * (1 + r)t
so
FV5 = $4,000 * (1+.11)5
FV5 =
Using TVM:
PV = -4000 , r(I/Y) = .11 , t(N) = 5
FV = $?
Suppose you invest $2,000 in ABC stock today. ABC stock does not pay any
dividends, but you expect to earn an annual return of 7% per year. What will be
the value of your investment in 8 years?
PV=
I/Y=
N=
FV= ------------Correct Answer--------------------FV = $2633.62
Suppose you need $25,000 in 4 years for a down payment on a house. If you can
earn 7.5% on your money, how much do you need today?
,FV=
I/Y=
N=
PV= ------------Correct Answer--------------------PV = $21,576.83
What is the present value of $500 to be received in 10 years? Assume the
appropriate discount rate is 3%.
FV=
I/Y=
N=
PV= ------------Correct Answer--------------------PV = $372.05
Suppose GM Corporation promises to pay all its employees a bonus of $100 in 2
years. GM has about 173,000 employees. What is the present value of that
obligation, assuming an appropriate discount rate of 5% per year?
FV=
I/Y=
N=
PV= ------------Correct Answer--------------------FV of obligation = 173,000*100 =
17,300,000
PV = $15,691,609.98
,Suppose you deposit $5000 today in an account paying r percent per year. If you
will get $10,000 in 10 years, what rate of return are you being offered?
FV=
I/Y=
N=
PV= ------------Correct Answer--------------------r(I/Y) = 7.18%
Suppose you plan to buy a house in 5 years. You estimate you will need a down
payment of $40,000. If you currently have $25,000, what annual rate of interest
must you earn to have enough for a down payment?
FV=
I/Y=
N=
PV= ------------Correct Answer--------------------r(I/Y) = 9.86%
Suppose we invest $5,000 in a security earning 8% per year. Determine how many
years it will take for the investment to be worth $10,000.
FV=
I/Y=
N=
PV= ------------Correct Answer--------------------N = 9.01 years
, Suppose you have $2000. You would like to buy a new mountain bike, but the
bike you have in mind costs $3500. If you can earn 6% per year, how long until
you can afford the bike you want?
FV=
I/Y=
N=
PV= ------------Correct Answer--------------------N = 9.6 years
Suppose you invest $500 today, $1000 at the end of one year, $2000 at the end of
the second year, and $3000 at the end of the third year. If your investment pays
6% interest per year, how much will you have at the end of four years? ------------
Correct Answer--------------------
=500*(1.06)^4+1000*(1.06)^3+2000*(1.06)^2+3000*1.06 = $7,249.45
Suppose you plan to invest $500 in a CD at the end of every year for 4 years. The
CD pays 5% per year. How much will you have accumulated at the end of the 4
years?
FVannuity = C x [(1+r)t - 1]/r ------------Correct Answer--------------------FV =
$2,155.06
Suppose we have an investment opportunity that promises to pay us $500 at the
end of one year, $1000 at the end of two years, and $1500 at the end of three
years. If our discount rate is 12% per year, what is the present value of this
investment opportunity?
PV =$500/(1+.12)1 + $1000/(1+.12)2
