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November 17, 2004
Anderson
Econ 136A
Midterm #2
Name _________________________
Write your name, perm #, Eon 136B Midterm #2 on both your scantron and
bluebook.
Use your scantrons for questions 125.
Use your bluebook
for questions 26, 27 & 28.

Complete on your scantron using #2 pencil.
1. Present value is
a. the value now of a future amount.
b. the amount that must be invested now to produce a known future
value.
c. always smaller than the future value.
d. all of these.
2. Which table would you use to determine how much you would need to
have deposited three years ago at 10% compounded annually in order
to have $1,000 today?
a. Future value of 1 or present value of 1
b. Future value of an annuity due of 1
c. Future value of an ordinary annuity of 1
d. Present value of an ordinary annuity of 1
3. An amount is deposited for eight years at 8%.
If compounding occurs
quarterly, then the table value is found at
a. 8% for eight periods.
b. 2% for eight periods.
c. 8% for 32 periods.
d. 2% for 32 periods.
4. Ann Ruth wants to invest a certain sum of money at the end of each
year for five years.
The investment will earn 6% compounded
annually.
At the end of five years, she will need a total of
$50,000 accumulated.
How should she compute her required annual
investment?
a. $50,000 times the future value of a 5year, 6% ordinary annuity
of 1.
b. $50,000 divided by the future value of a 5year, 6% ordinary
annuity of 1.
c. $50,000 times the present value of a 5year, 6% ordinary annuity
of 1.
d. $50,000 divided by the present value of a 5year, 6% ordinary
annuity of 1.
5. Which of the following is true?
a. Rents occur at the beginning of each period of an ordinary
annuity.
b. Rents occur at the end of each period of an annuity due.
c. Rents occur at the beginning of each period of an annuity due.
d. None of these.
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Given below are the future value factors for 1 at 8% for one to
five periods. Each item is based on 8% interest compounded annually.
Periods
Future Value of 1 at 8%
1
1.080
2
1.166
3
1.260
4
1.360
5
1.469
6. If $10,000 is put in a savings account today, what amount will be
available three years from today?
a. $10,000
1.260
b. $10,000 x 1.260
c. $10,000 x 1.080 x 3
d. ($10,000 x 1.080) + ($10,000 x 1.166) + ($10,000 x 1.260)
7. If a savings account pays interest at 4% compounded quarterly, then
the amount of $1 left on deposit for 5 years would be found in a
table using
a. 5 periods at 4%.
b. 5 periods at 1%.
c. 20 periods at 4%.
d. 20 periods at 1%.
8. Which of the following is NOT considered cash for financial
reporting purposes?
a. Petty cash funds and change funds
b. Money orders, certified checks, and personal checks
c. Coin, currency, and available funds
d. Postdated checks and I.O.U.'s
9. Bank overdrafts, if material, should be
a. reported as a deduction from the current asset section.
b. reported as a deduction from cash.
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 Spring '08
 anderson

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