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MULTIPLE CHOICE ch6

# MULTIPLE CHOICE ch6 - MULTIPLE CHOICEConceptual 21 Which of...

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MULTIPLE CHOICE —Conceptual 21. 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. b. A capital lease is entered into with the initial lease payment due one month subse- quent to the signing of the lease agreement. c. A ten-year 8% bond is issued on January 2 with interest payable semiannually on July 1 and January 1 yielding 7%. d. A ten-year 8% bond is issued on January 2 with interest payable semiannually on July 1 and January 1 yielding 9%. 22. Which of the following tables would show the smallest value for an interest rate of 5% for six periods? 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? 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? 25. Which table has a factor of 1.00000 for 1 period at every interest rate? a. Future value of 1 b. Present value of 1 c. Future value of an ordinary annuity of 1 d. Present value of an ordinary annuity of 1 26. Which table would show the largest factor for an interest rate of 8% for five periods? 27. Which of the following tables would show the smallest factor for an interest rate of 10% for six periods?

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