10. Time Value of Money

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of the following best describes a financial instrument where your money is invested for a fixed period and cannot be withdrawn before maturity without penalty?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

If you are to receive \$20,000 in 50 years, what is its present value today assuming a discount rate of 7.5\% compounded annually?

How does a low interest rate impact the power of compounding over time?

Which of the following best explains why knowledge of the time value of money is important in lease accounting?

What is the future value of $2, invested at an annual interest rate of 5\% compounded annually for 3 years?

Which of the following best defines compound interest?

Which of the following processes can be used to calculate the future value for multiple cash flows?

Given a loan with a nominal (stated) annual interest rate compounded quarterly, which of the following best describes how to calculate the Annual Percentage Rate (APR)?

If you borrow $10,000 at an annual interest rate of 8\% compounded semiannually, what is the amount of interest charged for the first 6 months?