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Which of the following transactions would require the use of the present value of an
annuity due
concept in order to calculate the present value of the asset obtained or
liability owed at the date of incurrence?
a.
A capital lease is entered into with the initial lease payment due upon the signing of
the lease agreement.
22.
Which of the following tables would show the smallest value for an interest rate of 5% for
six periods?
b.
Present value of 1
23.
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
24.
Which table would you use to determine how much must be deposited now in order to
provide for 5 annual withdrawals at the beginning of each year, starting one year hence?
d.
None of these
25.
Which table has a factor of 1.00000 for 1 period at every interest rate?
c.
Future value of an ordinary annuity of 1
26.
Which table would show the largest factor for an interest rate of 8% for five periods?
c.
Future value of an annuity due of 1
27.
Which of the following tables would show the smallest factor for an interest rate of 10%
for six periods?
b.
Present value of an ordinary annuity of 1
28.
The figure .94232 is taken from the column marked 2% and the row marked three
periods in a certain interest table.
From what interest table is this figure taken?
c.
Present value of 1
S
29.
Which of the following tables would show the largest value for an interest rate of 10% for
8 periods?
c.
Future amount of an ordinary annuity of 1 table.
S
30.
On June 1, 2006, Walsh Company sold some equipment to Fischer Company.
The two
companies entered into an installment sales contract at a rate of 8%.
The contract
required 8 equal annual payments with the first payment due on June 1, 2006.
What
type of compound interest table is appropriate for this situation?
a.
Present value of an annuity due of 1 table.
S
31.
Which of the following transactions would best use the present value of an annuity
due of 1 table?
a.
Diamond Bar, Inc. rents a truck for 5 years with annual rental payments of $20,000 to
be made at the beginning of each year.
P
32.
A series of equal receipts at equal intervals of time when each receipt is received at the
beginning of each time period is called an
c.
annuity due.

P
33.
In the time diagram below, which concept is being depicted?
0
1
$1
2
$1
3
$1
4
$1
a.
Present value of an ordinary annuity
P
34.
On December 1, 2007, Michael Hess Company sold some machinery to Shawn Keling
Company. The two companies entered into an installment sales contract at a
predetermined interest rate. The contract required four equal annual payments with the
first payment due on December 1, 2007, the date of the sale. What present value
concept is appropriate for this situation?
d.

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