10. Time Value of Money

Which one of the following best defines the compounding of interest?

Which of the following are present value methods used to analyze capital investment proposals?

When dealing with a loan that is to be repaid in equal periodic payments, which time value of money equation is most appropriate to determine the payment amount?

Which of the following is a potential benefit of choosing a longer repayment period for a loan, such as 4 years instead of 2 years?

What is the present value of \$500 to be received in 15 years if the annual interest rate is 4.5\% compounded annually?

What is the future value of $500 deposited for one year at an annual interest rate of 8% compounded once per year?

A perpetuity pays \$85 per year and costs \$950. What is the rate of return?

How is the future value of \$500 invested for one year at 6\% annual interest computed?

Which one of the following best defines a nominal interest rate?

Which term describes the process of converting an annuity's accumulated value into a periodic income stream?

If $1,000 is invested at an annual interest rate of 6\% compounded annually, what will be the value of the investment after 3 years?

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

If you desire your savings to double in 6 years, what annual rate of return (compounded annually) would you need to earn?

What is the effective annual rate (EAR) if the nominal annual interest rate is 8.25\% compounded quarterly?

What is the simple interest earned on an amount of $1,000 at an annual interest rate of 4% for 2 years?