Question 1

You expect to receive $5,000 at graduation one year from now.Your plan is to invest this money at 6.5 percent, compounded annually, until you have $50,000.At that time, you plan to travel around the world.How long from now will it be until you can begin your travels?

Accepted Answer

A)  36.57 years
B)  31.08 years
C)  34.55 years
D)  32.08 years
E)  37.57 yearsF) A) and B)
G) All of the above

Question 2

Western Bank pays 5 percent simple interest on its savings account balances, whereas Eastern Bank pays 5 percent compounded annually.If you deposited $6,000in each bank, how much more money would you earn from the Eastern Bank account at the end of 3 years?

Accepted Answer

A)  $55.84
B)  $45.75
C)  $60.47
D)  $40.09
E)  $50.14F) A) and E)
G) C) and E)

Question 3

Which one of the following is the correct formula for the current value of $600 invested today at 5 percent interest for 6 years?

Accepted Answer

A)  PV = $600/ [(1 + .06)  × 5]
B)  PV = $600/ [(1 +.05)  × 6]
C)  PV = $600/ (.06 × 5) 
D)  PV = $600 / (1 + .05) 6
E)  PV = $600 / (1 + .06) 5F) None of the above
G) C) and E)

Exam 4: Introduction to Valuation: the Time Value of Money

Which one of the following is the correct formula for the current value of $600 invested today at 5 percent interest for 6 years?

Correct Answer
verified

Western Bank pays 5 percent simple interest on its savings account balances, whereas Eastern Bank pays 5 percent compounded annually.If you deposited $6,000in each bank, how much more money would you earn from the Eastern Bank account at the end of 3 years?

Correct Answer
verified

You expect to receive $5,000 at graduation one year from now.Your plan is to invest this money at 6.5 percent, compounded annually, until you have $50,000.At that time, you plan to travel around the world.How long from now will it be until you can begin your travels?

Correct Answer
verified

Exam 4: Introduction to Valuation: the Time Value of Money

Which one of the following is the correct formula for the current value of $600 invested today at 5 percent interest for 6 years?

Correct AnswerverifiedShow Answer

Western Bank pays 5 percent simple interest on its savings account balances, whereas Eastern Bank pays 5 percent compounded annually.If you deposited $6,000in each bank, how much more money would you earn from the Eastern Bank account at the end of 3 years?

Correct AnswerverifiedShow Answer

You expect to receive $5,000 at graduation one year from now.Your plan is to invest this money at 6.5 percent, compounded annually, until you have $50,000.At that time, you plan to travel around the world.How long from now will it be until you can begin your travels?

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified