10. Time Value of Money

Which one of the following formulas correctly defines the Rule of 72 for estimating the number of years required to double an investment at a given annual interest rate?

What is the present value of the following cash-flow stream if the interest rate is 6\% per year? \[\begin{align*}\text{Year 1:} & \quad \$1,000 \\\text{Year 2:} & \quad \$1,000 \\\text{Year 3:} & \quad \$1,000 \end{align*}\](A) $2,673.01(B) $2,833.39(C) $2,545.95(D) $3,000.00

What is the present value (PV) of the following set of cash flows, discounted at an annual rate of 8\%? Year 1: \$1,000 Year 2: \$1,200 Year 3: \$1,500 \( PV = ? \)

Which of the following will increase the present value of an annuity, assuming all other factors remain constant?

Which of the following equations correctly calculates the present value (PV) of a single future sum (FV) to be received in $n$ periods at an interest rate $r$ per period?

What is the present value (PV) of an annuity due with 5 payments of $2 each, assuming a discount rate of 10% per period?

Which of the following components are required to determine the present value (PV) of a future sum using the time value of money equation?

Which of the following represents the basic present value equation?

Which of the following is true for calculating the present value of multiple cash flows?

Which formula moves a cash flow of \$800 ahead six years in time at an interest rate of 5\%?

The time value of money considers which of the following item(s) that change the value of money over time?

Which term refers to the increase in an amount of money as a result of interest earned over time?

Charlie invests $5,000 in an account that earns 6\% annual interest, compounded annually. Which of the following amounts is closest to the value of Charlie’s investment after 40 years?

When interest is earned not only on the principal but also on previously earned interest, it is referred to as:

The nominal interest rate minus the rate of inflation equals which of the following?