Finance 350

You are investing $100 today in a savings account. Which of the following terms refers to the total value of this investment one year from now? A. Discounted Value B. Present value C. Invested principal D. Future value E. Principal amount

D. Future value

which one of the following variables is the exponent in the present value formula? A. Future value B. Interest rate C. There is no exponent in the present value formula D. Number of time periods E. Present value

D. Number of time periods

Which one of the following will produce the lowest present value interest factor? A. 8 % interest for 10 years B. 8% interest for 5 years C. 6% interest for 10 years D. 6% interest for 5 years E. 6% interest for 8 years

A. 8 % interest for 10 years

the process of determining the present value of future cash flows in order to know their value today is refereed to as: A. discounted cash flow valuation B. interest on interest valuation C. complex factoring D. future value interest factoring E. compound interest valuation

A. Discounted cash flow valuation

What is the relationship between the present value and future value interest factors A. the future value factor is the exponent of the present value factor B. The factors are reciprocals of each other C. There is no relationship between these two factors D. The present value factor is the exponent of the future value factor

B. The factors are reciprocals of each other

Your goal is to have $1 million in your retirement savings on the day you retire. To fund this goal, you will make one lump sum deposit today. If you plan to retire ____ rather than ____ and earn a ____ rate of interest, then you can deposit a smaller lump sum today. A. Today; later; high B. later; sooner; high C. later; sooner; low D. sooner; later; low E. sooner; later; high

B. later; sooner; high