TEST BANK
Financial Accounting Fundamentals
John J. Wild
7th Edition
,Financial Accounting Fundamentals, 7e (Wild)
Appendix B Time Value of Money
1) Interest is the borrower's payment to the owner of an asset, for its use.
Answer: TRUE
Difficulty: 1 Easy
Topic: Present and Future Value Concepts
Learning Objective: B-C1 Describe the earning of interest and the concepts of present and future
values.
Bloom's: Remember
AACSB/Accessibility: Communication / Keyboard Navigation
AICPA: BB Industry; FN Measurement
2) From the perspective of an account holder, a savings account is a liability with interest.
Answer: FALSE
Difficulty: 1 Easy
Topic: Present and Future Value Concepts
Learning Objective: B-C1 Describe the earning of interest and the concepts of present and future
values.
Bloom's: Remember
AACSB/Accessibility: Communication / Keyboard Navigation
AICPA: BB Industry; FN Measurement
3) An interest rate is also called a discount rate.
Answer: TRUE
Difficulty: 1 Easy
Topic: Present Value of a Single Amount
Learning Objective: B-P1 Apply present value concepts to a single amount by using interest
tables.
Bloom's: Remember
AACSB/Accessibility: Communication / Keyboard Navigation
AICPA: BB Industry; FN Measurement
,4) Present and future value computations enable companies to measure or estimate the interest
component of holding assets or liabilities over time.
Answer: TRUE
Difficulty: 2 Medium
Topic: Present and Future Value Concepts
Learning Objective: B-C1 Describe the earning of interest and the concepts of present and future
values.
Bloom's: Understand
AACSB/Accessibility: Communication / Keyboard Navigation
AICPA: BB Industry; FN Measurement
5) The number of periods in a present value calculation may only be expressed in years.
Answer: FALSE
Difficulty: 1 Easy
Topic: Present Value of a Single Amount
Learning Objective: B-P1 Apply present value concepts to a single amount by using interest
tables.
Bloom's: Remember
AACSB/Accessibility: Communication / Keyboard Navigation
AICPA: BB Industry; FN Measurement
, Present Value of 1
Periods 3% 4% 5% 6% 7% 8% 9% 10% 12%
3 0.9151 0.8890 0.8638 0.8396 0.8163 0.7938 0.7722 0.7513 0.7118
4 0.8885 0.8548 0.8227 0.7921 0.7629 0.7350 0.7084 0.6830 0.6355
5 0.8626 0.8219 0.7835 0.7473 0.7130 0.6806 0.6499 0.6209 0.5674
6 0.8375 0.7903 0.7462 0.7050 0.6663 0.6302 0.5963 0.5645 0.5066
7 0.8131 0.7599 0.7107 0.6651 0.6227 0.5835 0.5470 0.5132 0.4523
8 0.7894 0.7307 0.6768 0.6274 0.5820 0.5403 0.5019 0.4665 0.4039
9 0.7664 0.7026 0.6446 0.5919 0.5439 0.5002 0.4604 0.4241 0.3606
10 0.7441 0.6756 0.6139 0.5584 0.5083 0.4632 0.4224 0.3855 0.3220
Future Value of 1
Periods 3% 4% 5% 6% 7% 8% 9% 10% 12%
3 1.0927 1.1249 1.1576 1.1910 1.2250 1.2597 1.2950 1.3310 1.4049
4 1.1255 1.1699 1.2155 1.2625 1.3108 1.3605 1.4116 1.4641 1.5735
5 1.1593 1.2167 1.2763 1.3382 1.4026 1.4693 1.5386 1.6105 1.7623
6 1.1941 1.2653 1.3401 1.4185 1.5007 1.5869 1.6771 1.7716 1.9738
7 1.2299 1.3159 1.4071 1.5036 1.6058 1.7138 1.8280 1.9487 2.2107
8 1.2668 1.3686 1.4775 1.5938 1.7182 1.8509 1.9926 2.1436 2.4760
9 1.3048 1.4233 1.5513 1.6895 1.8385 1.9990 2.1719 2.3579 2.7731
10 1.3439 1.4802 1.6289 1.7908 1.9672 2.1589 2.3674 2.5937 3.1058
Present Value of an Annuity of 1
Periods 3% 4% 5% 6% 7% 8% 9% 10% 12%
3 2.8286 2.7751 2.7232 2.6730 2.6243 2.5771 2.5313 2.4869 2.4018
4 3.7171 3.6299 3.5460 3.4651 3.3872 3.3121 3.2397 3.1699 3.0373
5 4.5797 4.4518 4.3295 4.2124 4.1002 3.9927 3.8897 3.7908 3.6048
6 5.4172 5.2421 5.0757 4.9173 4.7665 4.6229 4.4859 4.3553 4.1114
7 6.2303 6.0021 5.7864 5.5824 5.3893 5.2064 5.0330 4.8684 4.5638
8 7.0197 6.7327 6.4632 6.2098 5.9713 5.7466 5.5348 5.3349 4.9676
9 7.7861 7.4353 7.1078 6.8017 6.5152 6.2469 5.9952 5.7950 5.3282
10 8.5302 8.1109 7.7217 7.3601 7.0236 6.7101 6.4177 6.1446 5.6502
Future Value of an Annuity of 1
Periods 3% 4% 5% 6% 7% 8% 9% 10% 12%
3 3.0909 3.1216 3.1525 3.1836 3.2149 3.2464 3.2781 3.3100 3.3744
4 4.1836 4.2465 4.3101 4.3746 4.4399 4.5061 4.5731 4.6410 4.7793
5 5.3091 5.4163 5.5256 5.6371 5.7507 5.8666 5.9847 6.1051 6.3528
6 6.4684 6.6330 6.8019 6.9753 7.1533 7.3359 7.5233 7.7156 8.1152
7 7.6625 7.8983 8.1420 8.3938 8.6540 8.9228 9.2004 9.4872 10.0890
8 8.8923 9.2142 9.5491 9.8975 10.2598 10.6366 11.0285 11.4359 12.2997
9 10.1591 10.5828 11.0266 11.4913 11.9780 12.4876 13.0210 13.5795 14.7757
10 11.4639 12.0061 12.5779 13.1808 13.8164 14.4866 15.1929 15.9374 17.5487
Financial Accounting Fundamentals
John J. Wild
7th Edition
,Financial Accounting Fundamentals, 7e (Wild)
Appendix B Time Value of Money
1) Interest is the borrower's payment to the owner of an asset, for its use.
Answer: TRUE
Difficulty: 1 Easy
Topic: Present and Future Value Concepts
Learning Objective: B-C1 Describe the earning of interest and the concepts of present and future
values.
Bloom's: Remember
AACSB/Accessibility: Communication / Keyboard Navigation
AICPA: BB Industry; FN Measurement
2) From the perspective of an account holder, a savings account is a liability with interest.
Answer: FALSE
Difficulty: 1 Easy
Topic: Present and Future Value Concepts
Learning Objective: B-C1 Describe the earning of interest and the concepts of present and future
values.
Bloom's: Remember
AACSB/Accessibility: Communication / Keyboard Navigation
AICPA: BB Industry; FN Measurement
3) An interest rate is also called a discount rate.
Answer: TRUE
Difficulty: 1 Easy
Topic: Present Value of a Single Amount
Learning Objective: B-P1 Apply present value concepts to a single amount by using interest
tables.
Bloom's: Remember
AACSB/Accessibility: Communication / Keyboard Navigation
AICPA: BB Industry; FN Measurement
,4) Present and future value computations enable companies to measure or estimate the interest
component of holding assets or liabilities over time.
Answer: TRUE
Difficulty: 2 Medium
Topic: Present and Future Value Concepts
Learning Objective: B-C1 Describe the earning of interest and the concepts of present and future
values.
Bloom's: Understand
AACSB/Accessibility: Communication / Keyboard Navigation
AICPA: BB Industry; FN Measurement
5) The number of periods in a present value calculation may only be expressed in years.
Answer: FALSE
Difficulty: 1 Easy
Topic: Present Value of a Single Amount
Learning Objective: B-P1 Apply present value concepts to a single amount by using interest
tables.
Bloom's: Remember
AACSB/Accessibility: Communication / Keyboard Navigation
AICPA: BB Industry; FN Measurement
, Present Value of 1
Periods 3% 4% 5% 6% 7% 8% 9% 10% 12%
3 0.9151 0.8890 0.8638 0.8396 0.8163 0.7938 0.7722 0.7513 0.7118
4 0.8885 0.8548 0.8227 0.7921 0.7629 0.7350 0.7084 0.6830 0.6355
5 0.8626 0.8219 0.7835 0.7473 0.7130 0.6806 0.6499 0.6209 0.5674
6 0.8375 0.7903 0.7462 0.7050 0.6663 0.6302 0.5963 0.5645 0.5066
7 0.8131 0.7599 0.7107 0.6651 0.6227 0.5835 0.5470 0.5132 0.4523
8 0.7894 0.7307 0.6768 0.6274 0.5820 0.5403 0.5019 0.4665 0.4039
9 0.7664 0.7026 0.6446 0.5919 0.5439 0.5002 0.4604 0.4241 0.3606
10 0.7441 0.6756 0.6139 0.5584 0.5083 0.4632 0.4224 0.3855 0.3220
Future Value of 1
Periods 3% 4% 5% 6% 7% 8% 9% 10% 12%
3 1.0927 1.1249 1.1576 1.1910 1.2250 1.2597 1.2950 1.3310 1.4049
4 1.1255 1.1699 1.2155 1.2625 1.3108 1.3605 1.4116 1.4641 1.5735
5 1.1593 1.2167 1.2763 1.3382 1.4026 1.4693 1.5386 1.6105 1.7623
6 1.1941 1.2653 1.3401 1.4185 1.5007 1.5869 1.6771 1.7716 1.9738
7 1.2299 1.3159 1.4071 1.5036 1.6058 1.7138 1.8280 1.9487 2.2107
8 1.2668 1.3686 1.4775 1.5938 1.7182 1.8509 1.9926 2.1436 2.4760
9 1.3048 1.4233 1.5513 1.6895 1.8385 1.9990 2.1719 2.3579 2.7731
10 1.3439 1.4802 1.6289 1.7908 1.9672 2.1589 2.3674 2.5937 3.1058
Present Value of an Annuity of 1
Periods 3% 4% 5% 6% 7% 8% 9% 10% 12%
3 2.8286 2.7751 2.7232 2.6730 2.6243 2.5771 2.5313 2.4869 2.4018
4 3.7171 3.6299 3.5460 3.4651 3.3872 3.3121 3.2397 3.1699 3.0373
5 4.5797 4.4518 4.3295 4.2124 4.1002 3.9927 3.8897 3.7908 3.6048
6 5.4172 5.2421 5.0757 4.9173 4.7665 4.6229 4.4859 4.3553 4.1114
7 6.2303 6.0021 5.7864 5.5824 5.3893 5.2064 5.0330 4.8684 4.5638
8 7.0197 6.7327 6.4632 6.2098 5.9713 5.7466 5.5348 5.3349 4.9676
9 7.7861 7.4353 7.1078 6.8017 6.5152 6.2469 5.9952 5.7950 5.3282
10 8.5302 8.1109 7.7217 7.3601 7.0236 6.7101 6.4177 6.1446 5.6502
Future Value of an Annuity of 1
Periods 3% 4% 5% 6% 7% 8% 9% 10% 12%
3 3.0909 3.1216 3.1525 3.1836 3.2149 3.2464 3.2781 3.3100 3.3744
4 4.1836 4.2465 4.3101 4.3746 4.4399 4.5061 4.5731 4.6410 4.7793
5 5.3091 5.4163 5.5256 5.6371 5.7507 5.8666 5.9847 6.1051 6.3528
6 6.4684 6.6330 6.8019 6.9753 7.1533 7.3359 7.5233 7.7156 8.1152
7 7.6625 7.8983 8.1420 8.3938 8.6540 8.9228 9.2004 9.4872 10.0890
8 8.8923 9.2142 9.5491 9.8975 10.2598 10.6366 11.0285 11.4359 12.2997
9 10.1591 10.5828 11.0266 11.4913 11.9780 12.4876 13.0210 13.5795 14.7757
10 11.4639 12.0061 12.5779 13.1808 13.8164 14.4866 15.1929 15.9374 17.5487
