FINANCE 300 ( CSULB YULONG
MA) EXAM 1 CHPT 1, 4, 5
Katlyn needs to invest $5,318 today in order for her savings account
to be worth $8,000 six years from now. Which one of the following
terms refers to the $5,318? - ANSWERS-Present value
The interest rate used to compute the present value of a future cash
flow is called the: - ANSWERS-Discount Rate
Given an interest rate of zero percent, the future value of a lump sum
invested today will always: - ANSWERS-remain constant, regardless
of the investment time period.
All else held constant, the future value of a lump sum investment will
decrease if the: - ANSWERS-interest is changed to simple interest
from compound interest.
Which one of the following will increase the present value of a lump
sum future amount to be received in 15 years? - ANSWERS-
Changing to compound interest from simple interest
Travis invests $5,500 today into a retirement account. He expects to
earn 9.2 percent, compounded annually, on his money for the next 13
years. After that, he wants to be more conservative, so only expects to
earn 6 percent, compounded annually. How much money will he have
, in his account when he retires 25 years from now, assuming this is the
only deposit he makes into the account? - ANSWERS-
Eleven years ago, you deposited $3,200 into an account. Seven years
ago, you added an additional $1,000 to this account. You earned 9.2
percent, compounded annually, for the first 4 years and 5.5 percent,
compounded annually, for the last 7 years. How much money do you
have in your account today? - ANSWERS-
When you were born, your parents opened an investment account in
your name and deposited $1,500 into the account. The account has
earned an average annual rate of return of 5.3percent. Today, the
account is valued at $42,856. How old are you? - ANSWERS-
You want to have $40,000 for a down payment on a house 4 years
from now. If you can earn 5.6 percent, compounded annually on your
savings, how much do you need to deposit today to reach your goal? -
ANSWERS-
Starlite Industries will need $2.2 million 4.5 years from now to
replace some equipment. Currently, the firm has some extra cash and
would like to establish a savings account for this purpose. The
account pays 3.6 percent interest, compounded annually. How much
money must the company deposit today to fully fund the equipment
purchase? - ANSWERS-
You and your sister are planning a large anniversary party 3 years
from today for your parents' 50th wedding anniversary. You have
estimated that you will need $6,500 for this party. You can earn 2.6
MA) EXAM 1 CHPT 1, 4, 5
Katlyn needs to invest $5,318 today in order for her savings account
to be worth $8,000 six years from now. Which one of the following
terms refers to the $5,318? - ANSWERS-Present value
The interest rate used to compute the present value of a future cash
flow is called the: - ANSWERS-Discount Rate
Given an interest rate of zero percent, the future value of a lump sum
invested today will always: - ANSWERS-remain constant, regardless
of the investment time period.
All else held constant, the future value of a lump sum investment will
decrease if the: - ANSWERS-interest is changed to simple interest
from compound interest.
Which one of the following will increase the present value of a lump
sum future amount to be received in 15 years? - ANSWERS-
Changing to compound interest from simple interest
Travis invests $5,500 today into a retirement account. He expects to
earn 9.2 percent, compounded annually, on his money for the next 13
years. After that, he wants to be more conservative, so only expects to
earn 6 percent, compounded annually. How much money will he have
, in his account when he retires 25 years from now, assuming this is the
only deposit he makes into the account? - ANSWERS-
Eleven years ago, you deposited $3,200 into an account. Seven years
ago, you added an additional $1,000 to this account. You earned 9.2
percent, compounded annually, for the first 4 years and 5.5 percent,
compounded annually, for the last 7 years. How much money do you
have in your account today? - ANSWERS-
When you were born, your parents opened an investment account in
your name and deposited $1,500 into the account. The account has
earned an average annual rate of return of 5.3percent. Today, the
account is valued at $42,856. How old are you? - ANSWERS-
You want to have $40,000 for a down payment on a house 4 years
from now. If you can earn 5.6 percent, compounded annually on your
savings, how much do you need to deposit today to reach your goal? -
ANSWERS-
Starlite Industries will need $2.2 million 4.5 years from now to
replace some equipment. Currently, the firm has some extra cash and
would like to establish a savings account for this purpose. The
account pays 3.6 percent interest, compounded annually. How much
money must the company deposit today to fully fund the equipment
purchase? - ANSWERS-
You and your sister are planning a large anniversary party 3 years
from today for your parents' 50th wedding anniversary. You have
estimated that you will need $6,500 for this party. You can earn 2.6
