Question 1

Big League Sports borrowed $883,212 and must make annual year-end payments of $120,000 each.If the applicable interest rate is 6%, how many years will it take Big League Sports to pay off the loan?

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Question 2

A company is setting aside $21,354 today and wishes to have $30,000 at the end of three years for a down payment on a piece of property.What interest rate must the company earn?

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Question 3

A company borrows money from the bank by promising to make six annual year-end payments of $25,000 each.How much is the company able to borrow if the interest rate is 9%?

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Question 4

A company is setting up a sinking fund to pay off $8,654,000 in bonds that are due in seven years.The fund will earn 7% interest, and the company intends to put away a series of equal year-end amounts for seven years.What amount must the company deposit annually?

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Question 5

A company is beginning a savings plan.It will save $15,000 per year for the next 10 years.How much will the company have accumulated after the tenth year-end deposit, assuming the fund earns 10% interest?

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Question 6

_____________ is a borrower's payment to the owner of an asset for its use.

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Question 7

Madera Iron Sculpting is planning to save the money needed to replace one of its robotic welders in five years by making a one-time deposit of $20,000 today and four yearly contributions of $5,000 beginning at the end of year 1.The deposits will earn 10% interest.How much money will Sierra have accumulated at the end of five years to replace the welder?

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Question 8

A company borrows money from the bank by promising to make eight semiannual payments of $9,000 each.How much is the company able to borrow if the interest rate is 10% compounded semiannually?

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Question 9

To calculate present value of an amount, two factors are required: __________________ and ___________________.

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Question 10

The future value of an ________________ annuity is the accumulated value of each annuity payment with interest as of the date of the final payment.

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Question 11

You hope to retire in 10 years.Regrettably you are only just now beginning to save money for this purpose.You expect to save $6,000 a year at an annual rate of 8%.How much will you have accumulated when you retire?

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Question 12

A company has $50,000 today to invest in a fund that will earn 7%.How much will the fund contain at the end of eight years?

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Question 13

When you reach retirement age, you will have one fund of $100,000 from which you are going to make annual withdrawals of $14,702.The fund will earn 6% per year.For how many years will you be able to draw an even amount of $14,702?

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Question 14

The interest rate is also called the __________________ rate.

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Question 15

An _____________ is a series of equal payments occurring at equal intervals.

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Question 16

Daley Co.lends $524,210 to Davis Corporation.The terms of the loan require that Davis repay the loan with six semiannual period-end payments of $100,000 each.What semiannual interest rate is Davis paying on the loan?

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Question 17

Troy has $105,000 now.He has a loan of $175,000 that he must pay at the end of five years.He can invest his $105,000 at 10% interest compounded semiannually.Will Troy have enough to pay his loan at the end of the five years?

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Quiz 14: Time Value of Money