10. Time Value of Money

Which of the following terms refers to the expected time required to recover the initial investment amount in a project?

The expected amount of time to recover the initial amount of an investment is called the:

What is the effective annual rate (EAR) of a 6\% annual percentage rate (APR) compounded daily? (Assume 365 days in a year.)

Which of the following changes would decrease the present value of a future payment?

What is the value in year 3 of a \$700 cash flow to be received in year 6, assuming an annual interest rate of 10\% compounded annually?

Other things being equal, which of the following will produce the greatest future value for a single sum invested today?

Given an effective annual rate (EAR) of 14% and semiannual compounding, what is the nominal annual interest rate (APR) compounded semiannually?

What is the annual percentage rate (APR) on a loan that charges interest at the rate of 1.4\% per month, assuming interest is not compounded within the year?

If the risk-free rate is 3\% and the risk premium is 5\%, what is the required rate of return according to the time value of money concept?

Which of the following best describes a financial instrument where your money is invested for a fixed period and cannot be withdrawn before maturity without penalty?

Having a _______ interest rate will increase the total cost of an asset when buying on credit.

How does compound interest differ from simple interest?

If you want to have \$820 in 3 years, how much should you invest now at an annual interest rate of 5\% compounded continuously?

Compound interest is usually better than simple interest because it pays:

Which of the following are the two most common types of interest used in time value of money calculations?