Test Bank for Financial & Managerial Accounting, 20th Edition By Williams, Bettner and Smith| 9781266850929| All Chapters 1-26|LATEST

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,Test Bank for Financial & Managerial Accounting, 20th Edition by Jan Williams
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Answers Included n


Appendix B n



1) Future value is the amount that must be invested today at a specific interest rate to receive a
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n particular amount at some future date.
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⊚ falsen




2) The present value of an ordinary annuity is the amount that must be invested today at a
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n specific interest rate to in order to receive a particular amount at the end of a specified
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n number of future periods.
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⊚ falsen




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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⊚ false n




7) Annuities provide a series of cash flows to investors at regular intervals for a specified period
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n of 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 the
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n beginning of each of a specified number of periods.
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⊚ falsen




10) Interest rate percentages can be expressed in a variety of ways, including monthly, quarterly,
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n semiannually, and annually. n n


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11) The difference between a present value and a related future value amount depends on (1) the
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n discount rate and (2) the length of time over which the present value accumulates interest.
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⊚ falsen




12) The liability for post-retirement benefits is reported at the discounted present value of
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n anticipated future cash outlays to retired employees in the form of pensions, health insurance
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n premiums, etc. n



⊚ true n


⊚ falsen




13) As discount rates used to value investments increase, the present values of those investments
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n decreases.
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⊚ falsen




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, 14) Present values of future cash flows can only be calculated through the application of complex
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n formulas.
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15) The future value of an investment’s present value today can be determined by multiplying its
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n present value by the appropriate factor obtained from a future value table.
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⊚ false n




16) The future value of an ordinary annuity can be determined by multiplying the periodic
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n annuity payment by the appropriate factor obtained from a future value of an ordinary
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n annuity table. n



⊚ true n



⊚ false n




17) The present value of an investment that promises to pay a single lump-sum amount in the
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n future can be calculated by multiplying the future lump-sum amount by the appropriate factor
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n obtained from a present value of $1 table.
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⊚ false n




18) The present value of an ordinary annuity is calculated by multiplying the annuity’s periodic
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n cash payments by the appropriate factor obtained from a future value of an ordinary annuity
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n table.
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⊚ false n




19) If Larraine invested $33,000 at 6% on her 20th birthday, how much would Larraine have on
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n her 40th birthday?
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A) $105,831.00
B) $100,803.28
C) $121,824.94
D) $131,903.58




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