Chapter 6 quiz 201

# Intermediate Accounting

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Accounting 201 Name ___________________________ Chapter 6 Quiz Present and future value tables of \$1 at 3% are presented below: 1. Today Thomas deposited \$100,000 in a three-year, 12% CD that compounds quarterly. What is the maturity value of the CD? A. \$109,270. B. \$119,410. C. \$142,576. D. \$309,090. 2. Carol wants to invest money in a 6% CD account that compounds semiannually. Carol would like the account to have a balance of \$50,000 five years from now. How much must Carol deposit to accomplish her goal? A. \$35,069. B. \$43,131. C. \$37,205. D. \$35,000. 3. Shane wants to invest money in a 6% CD account that compounds semiannually. Shane would like the account to have a balance of \$100,000 four years from now. How much must Shane deposit to accomplish his goal? A. \$88,848. B. \$78,941. C. \$25,336. D. \$22,510.

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4. Bill wants to give Maria a \$500,000 gift in seven years. If money is worth 6% compounded semiannually, what is Maria's gift worth today? A. \$ 66,110. B. \$ 81,310. C. \$406,550. D. \$330,560. 5. Monica wants to sell her share of an investment to Barney for \$50,000 in three years. If money is worth 6% compounded semiannually, what would Monica accept today? A. \$ 8,375. B. \$41,874. C. \$11,941. D. \$41,000. 6. At the end of the next four years, a new machine is expected to generate net cash flows of \$8,000, \$12,000, \$10,000, and \$15,000, respectively. What are the cash flows worth today if a 3% interest rate properly reflects the time value of money in this situation? A. \$41,556. B. \$47,700. C. \$32,400. D. \$38,100. 7. At the end of each quarter, Patti deposits \$500 into an account that pays 12% interest compounded quarterly. How much will Patti have in the account in three years? A. \$7,096. B. \$7,013. C. \$7,129. D. \$8,880. 8. Sondra deposits \$2,000 in an IRA account on April 15, 2009. Assume the account will earn 3% annually. If she repeats this for the next nine years, how much will she have on deposit on April 14, 2019? A. \$20,600. B. \$20,728. C. \$23,616. D. \$24,715. 9. Shelley wants to cash in her winning lottery ticket. She can either receive ten, \$100,000 semiannual payments starting today, or she can receive a lump-sum payment now based on a 6% annual interest rate. What is the equivalent lump-sum payment? A. \$853,020. B. \$801,971. C. \$744,090. D. \$878,611.
10. On January 1, 2009, you are considering making an investment that will pay three annual payments of \$10,000. The first payment is not expected until December 31, 2011. You are eager to earn 3%. What is the present value of the investment on January 1, 2009? A. \$26,662. B. \$27,462. C. \$28,286. D. \$29,135.

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Chapter 6 quiz 201 - Accounting 201 Chapter 6 Quiz Name _...

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