Business and Finance Homework

Need finance homework help? Ask an Expert

Connect one-on-one with {0} who will answer your question

Customer Question

Which of the following statements...

Which of the following statements is most correct? (Points : 1)

If annual compounding is used, the effective annual rate equals the simple rate.

If annual compounding is used, the effective annual rate equals the periodic rate.

If a loan has a 12 percent simple rate with semiannual compounding, its effective annual rate is equal to 11.66 percent.

Both the first and second answers are correct.

Both the first and third answers are correct.

2. Why is the present value of an amount to be received (paid) in the future less than the future amount? (Points : 1)

Deflation causes investors to lose purchasing power when their dollars are invested for greater than one year.

Investors have the opportunity to earn positive rates of return, so any amount invested today should grow to a larger amount in the future.

Investments generally are not as good as those who sell them suggest, so investors usually are not willing to pay full face value for such investments, thus the price is discounted.

Because investors are taxed on the income received from investments they never will buy an investment for the amount expected to be received in the future.

None of the above is a correct answer.

3. Suppose someone offered you your choice of two equally risky annuities, each paying $5,000 per year for 5 years. One is an annuity due, while the other is a regular (or deferred) annuity. If you are a rational wealth-maximizing investor which annuity would you choose? (Points : 1)

The annuity due.

The deferred annuity.

Either one, because as the problem is set up, they have the same present value.

Without information about the appropriate interest rate, we cannot find the values of the two annuities, hence we cannot tell which is better.

The annuity due; however, if the payments on both were doubled to $10,000, the deferred annuity would be preferred.

4. Which of the following statements is correct? (Points : 1)

For all positive values of r and n, FVIFr, n > 1.0 and PVIFAr, n > n.

You may use the PVIF tables to find the present value of an uneven series of payments. However, the PVIFA tables can never be of use, even if some of the payments constitute

n annuity (for example, $100 each year for Years 3,

4, and 5), because the entire series does not constitute an annuity.

If a bank uses quarterly compounding for saving accounts, the simple rate will be greater than the effective annual rate.

The present value of a future sum decreases as either the simple interest rate or the number of discount periods per year increases.

All of the above statements are false.

5. Alice's investment advisor is trying to convince her to purchase an investment that pays $250 per year. The investment has no maturity; therefore the $250 payment will continue every year forever. Alice has determined that her required rate of return for such an investment should be 14 percent and that she would hold the investment for 10 years and then sell it. If Alice decides to buy the investment, she would receive the first $250 payment one year from today. How much should Alice be willing to pay for this investment? (Points : 1)

$1,304.03, because this is the present value of an ordinary annuity that pays $250 a year for 10 years at 14 percent.

$1,486.59, because this is the present value of an annuity due that pays $250 a year for 10 years at 14 percent.

$1,785.71, because this is the present value of a $250 perpetuity at 14 percent.

There is not enough information to answer this question, because the selling price of the investment in 10 years is not known today.

None of the above is correct.

6. A recent advertisement in the financial section of a magazine carried the following claim: "Invest your money with us at 14 percent, compounded annually, and we guarantee to double your money sooner than you imagine." Ignoring taxes, how long would it take to double your money at a simple rate of 14 percent, compounded annually? (Points : 1)

Approximately 3.5 years

Approximately 5 years

Exactly 7 years

Approximately 10 years

Exactly 14 years

7. You deposited $1,000 in a savings account that pays 8 percent interest, compounded quarterly, planning to use it to finish your last year in college. Eighteen months later, you decide to go to the Rocky Mountains to become a ski instructor rather than continue in school, so you close out your account. How much money will you receive? (Points : 1)

$1,171

$1,126

$1,082

$1,163

$1,008

8. If a 5-year regular annuity has a present value of $1,000, and if the interest rate is 10 percent, what is the amount of each annuity payment? (Points : 1)

$240.42

$263.80

$300.20

$315.38

$346.87

9. At an inflation rate of 9 percent, the purchasing power of $1 would be cut in half in 8.04 years. How long to the nearest year would it take the purchasing power of $1 to be cut in half if the inflation rate were only 4%? (Points : 1)

12 years

15 years

18 years

20 years

23 years

10. Assume that you can invest to earn a stated annual rate of return of 12 percent, but where interest is compounded semiannually. If you make 20 consecutive semiannual deposits of $500 each, with the first deposit being made today, what will your balance be at the end of Year 20? (Points : 1)

$52,821.19

$57,900.83

$58,988.19

$62,527.47

$64,131.50

If annual compounding is used, the effective annual rate equals the simple rate.

If annual compounding is used, the effective annual rate equals the periodic rate.

If a loan has a 12 percent simple rate with semiannual compounding, its effective annual rate is equal to 11.66 percent.

Both the first and second answers are correct.

Both the first and third answers are correct.

2. Why is the present value of an amount to be received (paid) in the future less than the future amount? (Points : 1)

Deflation causes investors to lose purchasing power when their dollars are invested for greater than one year.

Investors have the opportunity to earn positive rates of return, so any amount invested today should grow to a larger amount in the future.

Investments generally are not as good as those who sell them suggest, so investors usually are not willing to pay full face value for such investments, thus the price is discounted.

Because investors are taxed on the income received from investments they never will buy an investment for the amount expected to be received in the future.

None of the above is a correct answer.

3. Suppose someone offered you your choice of two equally risky annuities, each paying $5,000 per year for 5 years. One is an annuity due, while the other is a regular (or deferred) annuity. If you are a rational wealth-maximizing investor which annuity would you choose? (Points : 1)

The annuity due.

The deferred annuity.

Either one, because as the problem is set up, they have the same present value.

Without information about the appropriate interest rate, we cannot find the values of the two annuities, hence we cannot tell which is better.

The annuity due; however, if the payments on both were doubled to $10,000, the deferred annuity would be preferred.

4. Which of the following statements is correct? (Points : 1)

For all positive values of r and n, FVIFr, n > 1.0 and PVIFAr, n > n.

You may use the PVIF tables to find the present value of an uneven series of payments. However, the PVIFA tables can never be of use, even if some of the payments constitute

n annuity (for example, $100 each year for Years 3,

4, and 5), because the entire series does not constitute an annuity.

If a bank uses quarterly compounding for saving accounts, the simple rate will be greater than the effective annual rate.

The present value of a future sum decreases as either the simple interest rate or the number of discount periods per year increases.

All of the above statements are false.

5. Alice's investment advisor is trying to convince her to purchase an investment that pays $250 per year. The investment has no maturity; therefore the $250 payment will continue every year forever. Alice has determined that her required rate of return for such an investment should be 14 percent and that she would hold the investment for 10 years and then sell it. If Alice decides to buy the investment, she would receive the first $250 payment one year from today. How much should Alice be willing to pay for this investment? (Points : 1)

$1,304.03, because this is the present value of an ordinary annuity that pays $250 a year for 10 years at 14 percent.

$1,486.59, because this is the present value of an annuity due that pays $250 a year for 10 years at 14 percent.

$1,785.71, because this is the present value of a $250 perpetuity at 14 percent.

There is not enough information to answer this question, because the selling price of the investment in 10 years is not known today.

None of the above is correct.

6. A recent advertisement in the financial section of a magazine carried the following claim: "Invest your money with us at 14 percent, compounded annually, and we guarantee to double your money sooner than you imagine." Ignoring taxes, how long would it take to double your money at a simple rate of 14 percent, compounded annually? (Points : 1)

Approximately 3.5 years

Approximately 5 years

Exactly 7 years

Approximately 10 years

Exactly 14 years

7. You deposited $1,000 in a savings account that pays 8 percent interest, compounded quarterly, planning to use it to finish your last year in college. Eighteen months later, you decide to go to the Rocky Mountains to become a ski instructor rather than continue in school, so you close out your account. How much money will you receive? (Points : 1)

$1,171

$1,126

$1,082

$1,163

$1,008

8. If a 5-year regular annuity has a present value of $1,000, and if the interest rate is 10 percent, what is the amount of each annuity payment? (Points : 1)

$240.42

$263.80

$300.20

$315.38

$346.87

9. At an inflation rate of 9 percent, the purchasing power of $1 would be cut in half in 8.04 years. How long to the nearest year would it take the purchasing power of $1 to be cut in half if the inflation rate were only 4%? (Points : 1)

12 years

15 years

18 years

20 years

23 years

10. Assume that you can invest to earn a stated annual rate of return of 12 percent, but where interest is compounded semiannually. If you make 20 consecutive semiannual deposits of $500 each, with the first deposit being made today, what will your balance be at the end of Year 20? (Points : 1)

$52,821.19

$57,900.83

$58,988.19

$62,527.47

$64,131.50

Show More

Show Less

Was this answer helpful?

Describe your issueThe assistant will guide you

Chat 1:1 with a business tutorLicensed Experts are available 24/7

100% satisfaction guaranteeGet all the answers you need

Related Business and Finance Homework Questions

1.Read Chapter Four of Foundations of Finance. As you read, consider how you will evaluat

1.Read Chapter Four of Foundations of Finance. As you read, consider how you will evaluate Warehouse Distribution, Inc. and what recommendation you will make to Grammy and the board. 2.Review FIN-310 … read more

This is a business finance need, see below.....Develop

This is a business finance need, see below..... Develop a PowerPoint 10 slide presentation with introduction and conclusion that answers the following 12 questions: (I will upload the information shee… read more

Hi, I need help with a Finance Corporate online exam. How

Hi, I need help with a Finance Corporate online exam. How much would the cost be? 38) Your uncle offers you the choice of $102,000 in 10 years or $38,000 today. Use Appendix B. (a) Calculate the prese… read more

1. Using the formula for simple interest and the given values,

1. Using the formula for simple interest and the given values, find I. P=$200; r=6%; t=4 years; I=? I=$__ 2. Using the formula for simple interest, I=Prt, to find the indicated quantity. I=$36; r=6%; … read more

Week 3 ceange problems 1. Problem 4-1 Future Value of a

Week 3 ceange problems 1. Problem 4-1 Future Value of a Single Payment If you deposit $10,000 in a bank account that pays 9.4% interest annually, how much would be in your account after 12 years? Roun… read more

2. If your goal is determine how effectively a firm is managing

2. If your goal is determine how effectively a firm is managing its assets, which of the following sets of ratios would you examine? (Points : 5) profit margin, current ratio, fixed charge coverage ra… read more

Can someone help me with my finance questions that is due today? 1.

Can someone help me with my finance questions that is due today? 1. Future Value. What is the future value of a. $773 invested for 14 years at 11 percent compounded annually? b. $210 invested for 7 ye… read more

5-1A. (Compound interest) To what amount will the following

5-1A. (Compound interest) To what amount will the following investments accumulate? a. $5,000 invested for 10 years at 10 percent compounded annually b. $8,000 invested for 7 years at 8 percent compou… read more

1. Which of the following statements is most correct

1. Which of the following statements is most correct? a. If annual compounding is used, the effective annual rate equals the simple rate. b. If annual compounding is used, the effective annual rate eq… read more

DMC 5-1A. (Compount Interest) To what amount will the following

DMC 5-1A. (Compount Interest) To what amount will the following investments accumulate? - $5000 invested for 10 years at 10 percent compounded annually - $8000 invested for 7 years at 8 percent compou… read more

Hi HCraig, I will pay a $10.00 bonus. The deadline is Tuesday,

Hi HCraig, I will pay a $10.00 bonus. The deadline is Tuesday, June 7, 2011 PST. I have a few more questions that I need responses to by tonight as well if you are available. Thanks! MBL 9. List three… read more

Question 1 What is the PV of an annuity due with 5 payments

Question 1 What is the PV of an annuity due with 5 payments of $5,400 at an interest rate of 5.5%? $20,921.92 $25,544.20 $24,327.81 $27,976.98 $25,787.48 Question 2 Your father is about to retire, and… read more

Question 12004 are as follows January $ 90,000February &

Question 1 2004 are as follows: January $ 90,000 February 120,000 March 135,000 April 240,000 May $300,000 June 270,000 July 225,000 August 150,000 Of Sharpe's sales, 10 percent is for cash, another 6… read more

5. You receive a windfall of $10,000. Your debt from student

5. You receive a windfall of $10,000. Your debt from student loans is $17,720. If you invest the entire amount today at 10% interest, how long will it take to accumulate enough to cover your debt for … read more

You have the choice of two equally risk annuities, each payi

Do NOT need work shown just got behind on my tests trying to catch up There are 10 multiple choice questions You have the choice of two equally risk annuities, each paying 5,000 per year for 8 years. … read more

Which of the following investments will have the highest future

Which of the following investments will have the highest future value at the end of 10 years? Assume that the effective annual rate for all investments is the same. a. Investment A pays $250 at the be… read more

1. The primary form used in a checking account is a check register.

1. The primary form used in a checking account is a check register. (Points: 2) True False 2. The person who signs a check on the back is the maker (Points: 2) True False 3. When completing a check st… read more

A recent advertisement in the financial section of a magazine

A recent advertisement in the financial section of a magazine carried the following claim: Invest your money with us at 14 percent, compounded annually, and we guarantee to double your money sooner th… read more

Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.

JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.

Web sites like justanswer.com/legal

...leave nothing to chance.

...leave nothing to chance.

Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.

Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.

I will tell you that...the things you have to go through to be an Expert are quite rigorous.

Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help.

Freshfield, Liverpool, UK

This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!!

Los Angeles, CA

Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult.

Hesperia, CA

I couldn't be more satisfied! This is the site I will always come to when I need a second opinion.

Kernersville, NC

Just let me say that this encounter has been entirely professional and most helpful. I liked that I could ask additional questions and get answered in a very short turn around.

Woodstock, NY

Thank you so much for taking your time and knowledge to support my concerns. Not only did you answer my questions, you even took it a step further with replying with more pertinent information I needed to know.

Elkton, Maryland

He answered my question promptly and gave me accurate, detailed information. If all of your experts are half as good, you have a great thing going here.

Dallas, TX

< Previous | Next >

linda_us

Master's Degree

852 satisfied customers

A tutor for Business, Finance, Accounts and other related topics.

F. Naz

Bachelor's Degree

612 satisfied customers

Have completed B.COM and CA Finalist

12,028 satisfied customers

dasdasd

Bizhelp

Accountant

260 satisfied customers

BA degree and Certified Public Accountant

Mr. Gregory White

Master's Degree

215 satisfied customers

M.A., M.S. Education / Educational Administration

Brittany

Professional

30 satisfied customers

AA/Accounting BS/Business

SusanAthena

Master's Degree

13 satisfied customers

12 years experience consulting & management

< Previous | Next >

Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.