TEST BANK:
TIME VALUE OF MONEY
(Difficulty:
E = Easy, M = Medium, and T = Tough)
Multiple Choice:
Problems
Easy:
FV of a single payment
Answer: d
Diff: E
1
.
You deposit $2,000 in a savings account that pays 10 percent interest,
compounded annually.
How much will your account be worth in 15 years?
a. $2,030.21
b. $5,000.00
c. $8,091.12
d. $8,354.50
e. $9,020.10
FV of a single payment
Answer: c
Diff: E
2
.
You deposit $1,000 in a savings account that pays 9 percent interest,
compounded annually.
How much will your account be worth in 6 years?
a. $1,054.00
b. $1,199.00
c. $1,677.10
d. $1,689.48
e. $7,523.33
PV of a single payment
Answer: b
Diff: E
3
.
You can earn 8 percent interest, compounded annually.
How much must
you deposit today to withdraw $10,000 in 6 years?
a. $5,402.69
b. $6,301.70
c. $6,756.76
d. $8,432.10
e. $9,259.26
PV of a single payment
Answer: e
Diff: E
4
.
You can earn 15 percent interest, compounded annually.
How much must
you deposit today to withdraw $4,000 in 10 years?
a. $525.11
b. $842.51
c. $869.57
d. $957.57
e. $988.74
Growth rate
Answer: d
Diff: E
5
.
In 1958 the average tuition for one year at an Ivy League school was
Chapter 2 - Page 1