Test Bank for Financial & Managerial Accounting, 20th Edition by Jan Williams:Complete Solution Guide A+.

Test Bank for Financial & Managerial Accounting, 20th Edition by Jan Williams
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1) Future value is the amount that must be invested today at a specific interest rate to receive
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aparticular amount at some future date.
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2) The present value of an ordinary annuity is the amount that must be invested today at
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aspecific interest rate to in order to receive a particular amount at the end of a
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specified number of future periods.
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3) The future value of an investment gradually increases toward its present value amount.
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4) Compound interest assumes that the interest earned on a particular investment is reinvested.
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5) Discounting a future value amount will determine its present value amount.
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6) The lower the discount rate of an investment, the lower the present value of the investment.
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7) Annuities provide a series of cash flows to investors at regular intervals for a specified
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periodof time.
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,8) The market price of a bond is equal to the discounted present value of its future cash flows.
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9) An ordinary annuity is the discounted present value of a series of cash flows made at
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thebeginning of each of a specified number of periods.
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10) Interest rate percentages can be expressed in a variety of ways, including monthly,
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quarterly,semiannually, and annually.
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11) The difference between a present value and a related future value amount depends on (1)
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thediscount rate and (2) the length of time over which the present value accumulates
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interest.
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12) The liability for post-retirement benefits is reported at the discounted present value of
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anticipated future cash outlays to retired employees in the form of pensions, health
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insurancepremiums, etc.
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13) As discount rates used to value investments increase, the present values of those
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investmentsdecreases.
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,14) Present values of future cash flows can only be calculated through the application of
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complexformulas.
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15) The future value of an investment’s present value today can be determined by multiplying
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itspresent value by the appropriate factor obtained from a future value table.
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16) The future value of an ordinary annuity can be determined by multiplying the
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periodicannuity payment by the appropriate factor obtained from a future value of an
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ordinaryannuity table.
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17) The present value of an investment that promises to pay a single lump-sum amount in the
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future can be calculated by multiplying the future lump-sum amount by the appropriate
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factorobtained from a present value of $1 table.
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18) The present value of an ordinary annuity is calculated by multiplying the annuity’s
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periodic cash payments by the appropriate factor obtained from a future value of an
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ordinary annuitytable.
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19) If Larraine invested $33,000 at 6% on her 20th birthday, how much would Larraine have
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onher 40th birthday?
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A) $105,831.00 RT RT R T




B) $100,803.28 RT RT R T




C) $121,824.94 RT RT R T




D) $131,903.58 RT RT R T




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, 20) If Larraine invested $24,000 at 5% on her 20th birthday, how much would Larraine have
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onher 40th birthday?
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A) $63,672.00 RT RT R T




B) $73,293.60 RT RT R T




C) $79,358.28 RT RT R T




D) $60,646.83 RT RT R T




21) If Jonathan invests $41,000 today for 10 years and it grows to $165,886, what rate of
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interesthas Jonathan received?
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A) 10% RT RT R T




B) 30% RT RT R T




C) 15% RT RT R T




D) 20% RT RT R T




22) If Jonathan invests $44,000 today for 6 years and it grows to $69,828, what rate of
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interesthas Jonathan received?
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A) 12% R T




B) 6%
C) 8%
D) 16% R T




23) How much must Rashad invest today in order to have $25,200 in 9 years assuming
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15%interest compounded annually?
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A) $7,156.80 R T




B) $16,800.00 RT RT R T




C) $23,066.24 RT RT R T




D) $17,842.00 RT RT R T




24) How much must Rashad invest today in order to have $15,000 in 8 years assuming
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12%interest compounded annually?
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A) $6,060.00 R T




B) $10,000.00 RT RT R T




C) $19,531.25 RT RT R T




D) $11.520.00 RT RT R T




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