Question 1 of 40

2.5/ 2.5 Points

Your firm intends to finance the purchase of a new construction crane. The cost is $1,500,000. What is the size of the first payment if the crane is financed with an interestonly loan at an annual rate of 8.50%?
A. $228,611.56

B. $127,500

C. $3,391,475.16

D. There is not enough information to answer this question.


Question 2 of 40

2.5/ 2.5 Points

You just won the Publisher's Clearing House Sweepstakes and the right to 20 aftertax ordinary annuity cash flows of $163,291.18. Assuming a discount rate of 7.50%, what is the present value of your lottery winnings? Use a calculator to determine your answer.
A. $3,265,823.60

B. $1,789,520.81

C. $1,664,670.52

D. There is not enough information to answer this question.


Question 3 of 40

2.5/ 2.5 Points

Your employer has agreed to place yearend deposits of $1,000, $2,000, and $3,000 into your retirement account. The $1,000 deposit will be one year from today, the $2,000 deposit two years from today, and the $3,000 deposit three years from today. If your account earns 5% per year, how much money will you have in the account at the end of Year 3 when the last deposit is made?
A. $5,357.95

B. $6,000

C. $6,202.50

D. $6,727.88


Question 4 of 40

0.0/ 2.5 Points

An annuity is a series of:
A. variable cash payments at regular intervals across time.

B. equal cash payments at regular intervals across time.

C. variable cash payments at different intervals across time.

D. equal cash payments at different intervals across time.


Question 5 of 40

0.0/ 2.5 Points

What is the present value of a lottery paid as an annuity due for 20 years if the cash flows are $250,000 per year and the appropriate discount rate is 7.50%?
A. $5,000,000.00

B. $3,186,045.39

C. $2,739,769.55

D. $2,548,622.84


Question 6 of 40

2.5/ 2.5 Points

You have just won the Reader's Digest lottery of $5,000 per year for 20 years, with the first payment today followed by 19 more startoftheyear cash flows. At an interest rate of 5%, what is the present value of your winnings?
A. $100,000

B. $65,426.60

C. $62,311.05

D. $47,641.18


Question 7 of 40

0.0/ 2.5 Points

What is the future value in Year 25 of an ordinary annuity cash flow of $2,000 per year at an interest rate of 10% per year?
A. $66,505.81

B. $55,000.00

C. $196,694.12

D. $216,363.53


Question 8 of 40

0.0/ 2.5 Points

Your department at work places $10,000 every yearend into an account earning 5%. The money is used when the corporate office fails to fully finance your profitable projects. The money has not been touched since a deposit was made exactly five years ago. If the most recent deposit was made today, how much money is currently in the account?
A. $55,256.31

B. $60,000

C. $65,256.31

D. $68,019.13


Question 9 of 40

2.5/ 2.5 Points

A/An __________ is a series of equal endoftheperiod cash flows.
A. annuity

B. annuity due

C. perpetuity due

D. None of the above


Question 10 of 40

2.5/ 2.5 Points

If for the next 40 years you place $3,000 in equal yearend deposits into an account earning 8% per year, how much money will be in the account at the end of that time period?
A. $120,000.00

B. $777,169.56

C. $839,343.12

D. $2,606,942.58


Question 11 of 40

0.0/ 2.5 Points

You currently have $67,000 in an interestearning account. From this account, you wish to make 20 yearend payments of $5,000 each. What annual rate of return must you make on this account to meet your objective?
A. 4.16%

B. 5.03%

C. 6.42%

D. 7.32%


Question 12 of 40

0.0/ 2.5 Points

Your company just sold a product with the following payment plan: $50,000 today, $25,000 next year, and $10,000 the following year. If your firm places the payments into an account earning 10% per year, how much money will be in the account after collecting the last payment?
A. $99,000

B. $98,000

C. $88,500

D. $85,000


Question 13 of 40

0.0/ 2.5 Points

Your parents have an investment portfolio of $400,000, and they wish to take out cash flows of $50,000 per year as an ordinary annuity. How long will their portfolio last if the portfolio is invested at an annual rate of 4.50%? Use a calculator to determine your answer.
A. 8 years

B. 9.10 years

C. 9.60 years

D. 10.14 years


Question 14 of 40

0.0/ 2.5 Points

When you pay off the principal and all of the interest at one time at the maturity date of the loan, we call this type of loan a(n):
A. amortized loan.

B. interestonly loan.

C. discount loan.

D. compound loan.


Question 15 of 40

0.0/ 2.5 Points

Given the following cash flows, what is the future value at Year 6 when compounded at an interest rate of 8%?
Year

0

2

4

6

Cash Flow

$5,000

$7,000

$9,000

$11,000

A. $38,955.39

B. $56,687.43

C. $42,074.42

D. $32,000


Question 16 of 40

0.0/ 2.5 Points

If you borrow $100,000 at an annual rate of 8% for a 10year period and repay the total amount of principal and interest due of $215,892.50 at the end of 10 years, what type of loan did you have?
A. Amortized loan

B. Interestonly loan

C. Discount loan

D. Compound loan


Question 17 of 40

0.0/ 2.5 Points

The main variables of the TVM equation are:
A. present value, future value, time, interest rate, and payment.

B. present value, future value, perpetuity, interest rate, and payment.

C. present value, future value, time, annuity, and interest rate.

D. present value, future value, perpetuity, interest rate, and principal.


Question 18 of 40

0.0/ 2.5 Points

What is the future value in Year 12 of an ordinary annuity cash flow of $6,000 per year at an interest rate of 4% per year?
A. $90,154.83

B. $93,761.02

C. $28,675.97

D. $32,117.08


Question 19 of 40

0.0/ 2.5 Points

The furniture store offers you nomoneydown on a new set of living room furniture. Further, you may pay for the furniture in three equal annual endoftheyear payments of $1,000 each with the first payment to be made one year from today. If the discount rate is 6%, what is the present value of the furniture payments?
A. $3,183.60

B. $3,000

C. $2,833.39

D. $2,673.01


Question 20 of 40

0.0/ 2.5 Points

If you borrow $50,000 at an annual interest rate of 12% for six years, what is the annual payment (prior to maturity) on a discount loan?
A. $0

B. $6,000

C. $8,333.33

D. $12,161.29


