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CHAP004students

# CHAP004students - Multiple Choice Questions 2 The future...

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Multiple Choice Questions 2. The future value of \$100 at a 5% per year interest rate at the end of one year is: A) \$95.00 B) \$105.00 C) \$97.50 D) None of the above. Answer: B LOD: 3 Page: 63 A-Head: Valuing Monetary Payments Now and in the Future. 4. Which of the following expresses 5.65%?

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8.If a saver is willing to wait a year to receive a \$100 payment rather than accept a lesser amount today:
9. Which of the following best expresses the proceeds a lender receives from a simple loan? 11. Suppose Tom receives a one year simple loan from ABC Bank for \$5000.00. At the end of the year, Tom repays \$5400.00 to ABC Bank. The interest rate on Tom's loan was: A) \$400 B) 8.00% C) 7.41% D) None of the above Answer: B LOD: 3 Page: 63 A-Head: Valuing Monetary Payments Now and in the Future.

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13. Compound interest is the idea: 15. Which of the following best expresses the payment a lender receives for lending their money for three years? 16. Suppose Paul borrows \$4000 for one year from his grandfather who charges Paul 7% interest. At the end of the year Paul will have to repay his grandfather:
17. A lender is promised a \$100 payment (including interest) one year from today. If the lender has a 6% opportunity cost of money, she should be willing to accept what amount today? A) \$100.00 B) \$106.20 C) \$96.40 D) \$94.34 Answer: D LOD: 3 Page: 67 A-Head: Valuing Monetary Payments Now and in the Future.

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