10. Time Value of Money

Which of the following tax planning strategies is based on the present value of money?

What is the formula to calculate the monthly payment (PMT) on a 36-month loan with principal $P$, annual interest rate $r$ (compounded monthly), and 36 equal payments?

Which of the following best describes an amount paid for the use of money for a period of time?

What is the future value of an ordinary annuity where $400 is invested at the end of each year for 15 years at an annual interest rate of 6%?

If you want to have \$1,000,000 saved at retirement in 30 years and you can earn an annual interest rate of 6\% compounded monthly, how much must you deposit at the end of each month? (Assume payments are made at the end of each period.)

In a standard loan amortization schedule, what happens to the amount of principal paid with each successive payment over time?

Which one of the following best describes an ordinary annuity?

Jorge takes out a loan of $10,000 at an annual interest rate of 6%, compounded annually. If he makes equal annual payments of $2,000 at the end of each year, approximately how many years will it take Jorge to pay off the loan?

Compound interest earned on a savings account _____.

The interest rate used to compute the present value of a future cash flow is called the:

If you invest $10 today in an account that earns an annual interest rate of 5\% compounded annually, how much will you have at the end of 3 years?

To the nearest year, it will take about how many years to double the original investment at an annual interest rate of 8\% compounded annually?

The variables in a present value of a lump sum problem include all of the following, except:

If the going rate of interest is 10\% per year, what is the present value (PV) of \$1,000 to be received in 3 years? (Assume annual compounding.)

Calculating the present value of a future cash flow to determine its worth today is commonly called: