136Amidterm2

# 136Amidterm2 - November 17, 2004 Anderson Econ 136A Midterm...

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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 blue-book. Use your scantrons for questions 1-25. Use your blue-book 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 5-year, 6% ordinary annuity of 1. b. \$50,000 divided by the future value of a 5-year, 6% ordinary annuity of 1. c. \$50,000 times the present value of a 5-year, 6% ordinary annuity of 1. d. \$50,000 divided by the present value of a 5-year, 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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Midterm #2--Page 2 ------------------------------ 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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## 136Amidterm2 - November 17, 2004 Anderson Econ 136A Midterm...

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