# Fin 300 Questions

1860 Words8 Pages
Public Question Time value of money 1. Harry invested \$10,600 in an account that pays 4 percent simple interest. How much money will he have at the end of five years? a. 12,897 b. 12,720 c. 42,400 d. Other 2. A local bank offers an account that pays 8%, compounded quarterly, for any deposits of \$10,000 or more that are left in the account for a period of 5 years. The effective annual rate of interest on this account is: a. 4.65% b. 9.01% c. 8.24% d. Other 3. What is the effective annual rate if the stated rate is 12% compounded quarterly? a. 12.55% b. 57.35% c. 12.00% d. Other 4. If \$1,000 is invested at the beginning of the year at an annual rate of 48%, compounded quarterly, what would that investment be worth at the end of the year? a. \$1,574 b. \$1,048 c. \$4,798 d. Other 5. Janie Morgan needs to accumulate \$2,000 in 18 months. If she can earn 6% at the bank, compounded quarterly, how much she deposit today? a. \$1,832.61 b. \$1,829.08 c. \$1,840.45 d. Other 6. An annuity will pay eight annual payments of \$100, with the first payment to be received one year from now. If the interest rate is 12% per year, what is the present value of this annuity? a. \$1,229.97 b. \$496.76 c. \$556.38 d. Other 7. Given the following cash flow stream at the end of each year: Year 1: \$4,000 Year 2: \$2,000 Year 3: 0 Year 4: -\$1,000 Using a 10% discount rate, the present value of this cash flow stream is: a. \$4,606 b. \$3,415 c. \$3,636 d. Other 8. Consider a 10-year annuity that promises to pay out \$10,000 per year, given this is an ordinary annuity and that an investor can earn 10% on her money, the future value of this annuity, at the end of 10 years, would be: a. \$175,312 b. \$110,000 c. \$159,374 d. Other 9. What is the total present value of \$200 to be received one year from now, \$300 to be