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Section Problem Set 8
Present Value Workshop
Name:
Section:
Multiple Choice.
1.
Calculation of the amount of the equal periodic payments that would be required at the end of each year
to accumulate a $20,000 fund at the end of the tenth year is most readily determined by reference to a
table that shows the
A) future value of $1.
B) present value of $1.
C) future value of annuity of $1.
D) present value of a single sum.
E)
None of the above is correct.
2.
How much would Kristen have to deposit in the bank at the end of each of the next five years if she
wishes to have $5,000 in the bank at the end of that time period, assuming she will be earning 6% annual
rate of return? (Round to the nearest dollar).
A) $
887.
B) $
943.
C) $1,000.
D) $1,187.
E)
$5,000.
3.
If the market rate of interest is 10%, a rational person would just as soon receive $1,100 three years from
now as what amount today (round to the nearest dollar)?
A) $
783.
B) $
826.
C) $1,000.
D) $1,100.
E)
None of the above is correct.
4.
Kristen's grandmother promises to give her $1,000 at the end of each of the next five years. How much
is the money worth today, assuming Kristen could invest the money and earn a 6% annual rate of return?
(Round to the nearest dollar).
A) $
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This note was uploaded on 03/05/2008 for the course AEM 2210 taught by Professor Little,j. during the Fall '07 term at Cornell University (Engineering School).
 Fall '07
 LITTLE,J.

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