What is the present value of $1,000 to be received 10 years from today? Assume that the investment pays 8.5%

What is the present value of $1,000 to be received 10 years from today? Assume that the investment pays 8.5% and it is compounded monthly (round to the nearest $1).

A) $893

B) $3,106

C) $429

D) $833

The present value of a single future sum

A) increases as the number of discount periods increases.

B) is generally larger than the future sum.

C) depends upon the number of discount periods.

D) increases as the discount rate increases.

Assuming two investments have equal lives, a high discount rate tends to favor

A) the investment with large cash flow early.

B) the investment with large cash flow late.

C) the investment with even cash flow.

D) neither investment since they have equal lives.

High discount rates favor

A) neither long-term nor short-term investments.

B) both long-term and short-term investments.

C) long-term investments.

D) short-term investments.

An increase in ________ will decrease present value.

A) the discount rate per period

B) the original amount invested

C) the number of periods

D) both A and C

What is the present value of $12,500 to be received 10 years from today? Assume a discount rate of 8% compounded annually and round to the nearest $10.

A) $5,790

B) $11,574

C) $9,210

D) $17,010

If you put $700 in a savings account with a 10% nominal rate of interest compounded monthly, what will the investment

If you put $700 in a savings account with a 10% nominal rate of interest compounded monthly, what will the investment be worth in 21 months (round to the nearest dollar)?

A) $827

B) $833

C) $828

D) $1,176

Which of the following is the formula for compound value?

A) FVn = P(1 + i)n 

B) FVn = (1 + i)/P

C) FVn = P/(1 + i)n 

D) FVn = P(1 + i)-n 

At 8% compounded annually, how long will it take $750 to double?

A) 6.5 years

B) 48 months

C) 9 years

D) 12 years

At what rate must $400 be compounded annually for it to grow to $716.40 in 10 years?

A) 6%

B) 5%

C) 7%

D) 8%

An increase in future value can be caused by an increase in the

A) annual interest rate.

B) number of compounding periods.

C) original amount invested.

D) both A and B.

A friend plans to buy a big-screen TV/entertainment system and can afford to set aside $1,320 toward the purchase today. If your friend can earn 5.0%, compounded yearly, how much can your friend spend in four years on the purchase? Round off to the nearest $1.

A) $1,444

B) $1,604

C) $1,764

D) $1,283

You just purchased a parcel of land for $10,000. If you expect a 12% annual rate of return on your investment, how much will you sell the land for in 10 years?

A) $25,000

B) $31,060

C) $38,720

D) $34,310

If you place $50 in a savings account with an interest rate of 7% compounded weekly, what will the investment be worth at the end of five years (round to the nearest dollar)?

A) $72

B) $70

C) $71

D) $57