Question 1

You have purchased a U.S.Treasury bond for $3, 000.No payments will be made until the bond matures 10 years from now, at which time it will be redeemed for $5, 000.What interest rate will you earn on this bond?

Accepted Answer

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Question 2

You have $5, 000 invested in a bank that pays 3.8% annually.How long will it take for your funds to triple?

Accepted Answer

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Question 3

The going rate of interest on a 5-year treasury bond is 4.25%.You have one that will pay $2, 500 five years from now.How much is the bond worth today?

Accepted Answer

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Question 4

Your investment account pays 8.0%, compounded annually.If you invest $5, 000 today, how many years will it take for your investment to grow to $9, 140.20?

Accepted Answer

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Question 5

You expect to receive $5, 000 in 25 years.How much is it worth today if the discount rate is 5.5%?

Accepted Answer

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Question 6

Wildwoods, Inc.earned $1.50 per share five years ago.Its earnings this year were $3.20.What was the growth rate in earnings per share (EPS)over the 5-year period?

Accepted Answer

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Question 7

Your investment advisor has recommended your invest in bonds that pay 6.0%, compounded annually.If you invest $10, 000 today, how many years will it take for your investment to grow to $30, 000?

Accepted Answer

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Question 8

You want to open a sushi bar 3 years from now, and you plan to save $7, 000 per year, beginning immediately.You will make 3 deposits in an account that pays 5.2% interest.Under these assumptions, how much will you have 3 years from today?

Accepted Answer

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Question 9

You are hoping to buy a new boat 3 years from now, and you plan to save $4, 200 per year, beginning one year from today.You will deposit your savings in an account that pays 5.2% interest.How much will you have just after you make the 3rd deposit, 3 years from now?

Accepted Answer

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Question 10

What is the PV of an ordinary annuity with 10 payments of $2, 700 if the appropriate interest rate is 5.5%?

Accepted Answer

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Question 11

Brockman Corporation's earnings per share were $3.50 last year, and its growth rate during the prior 5 years was 9.0% per year.If that growth rate were maintained, how many years would it take for Brockman's EPS to triple?

Accepted Answer

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Question 12

You would like to travel in South America 5 years from now, and you can save $3, 100 per year, beginning one year from today.You plan to deposit the funds in a mutual fund that you think will return 8.5% per year.Under these conditions, how much would you have just after you make the 5th deposit, 5 years from now?

Accepted Answer

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Question 13

You want to buy new kitchen appliances 2 years from now, and you plan to save $8, 200 per year, beginning one year from today.You will deposit your savings in an account that pays 6.2% interest.How much will you have just after you make the 2nd deposit, 2 years from now?

Accepted Answer

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Question 14

Ten years ago, Kronan Corporation earned $0.50 per share.Its earnings this year were $2.20.What was the growth rate in earnings per share (EPS)over the 10-year period?

Accepted Answer

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Question 15

You have just purchased a U.S.Treasury bond for $747.25.No payments will be made until the bond matures 5 years from now, at which time it will be redeemed for $1, 000.What interest rate will you earn on this bond?

Accepted Answer

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Question 16

Your bank pays 4% interest annually.You have $2, 500 invested in the bank.How long will it take for your funds to double?

Accepted Answer

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Question 17

Your friend offers to pay you an annuity of $2, 500 at the end of each year for 3 years in return for cash today.You could earn 5.5% on your money in other investments with equal risk.What is the most you should pay for the annuity?

Accepted Answer

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Question 18

What is the PV of an ordinary annuity with 5 payments of $4, 700 if the appropriate interest rate is 4.5%?

Accepted Answer

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Question 19

Suppose a Google.com bond will pay $4, 500 ten years from now.If the going interest rate on safe 10-year bonds is 4.25%, how much is the bond worth today?

Accepted Answer

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Question 20

You want to purchase a motorcycle 4 years from now, and you plan to save $3, 500 per year, beginning immediately.You will make 4 deposits in an account that pays 5.7% interest.Under these assumptions, how much will you have 4 years from today?

Accepted Answer

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Quiz 4: Time value of money