time value of money part 2

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If a $10,000 investment earns a 7% annual return, what should its value be after 6 years?

$15,010

If you deposit $500 into a Certificate of Deposit earning 3%, what would be your earnings after 1 year?

15

Randy Hill wants to retire in 20 years with $1,000,000. If he can earn 10% per year on his investments, how much does he need to deposit each year to reach his goal? Round your answer to the nearest dollar.

17,460

If you begin saving $2,000 a year at 5% (from age 22 to age 30 or 9 years), what will these funds grow to in this time period?

22,054

If you want $1,000 three years from now and you earn 4 percent on your savings, how much do you need to deposit now?

889

If inflation is expected to be 8 percent, how long will it take for prices to double?

9 years

The saving component of financial planning focuses on long-term security and includes:

A regular savings plan for emergencies

Which of the following best describes the concept of the time value of money?

Increases in an amount of money as a result of interest earned.

Robert Brown is interested in attending a concert next weekend. Unfortunately, he is scheduled to work. If he finds a substitute for his shift so he can attend the concert, what kind of cost is he incurring?

Personal opportunity cost relating to time

Many Americans have money problems because of

Poor planning and weak money management habits

An example of a personal opportunity cost would be

Time comparing several brands of personal computers.

To calculate the time value of money, we need to consider all of the following except the

Type of investment.

index funds

are passively managed

wh his less likely to be harmed by inflation

borrowers

the problem of bankruptcy is associated with overuse and misuse of credit in the --- component of financial planning

borrowing

future value computations are often referred to as

compounding

savages are generated whenever

current income exceeds current spending

the first step to financial planning process is

determine you current financial situautino

present value computation are also referred to as

discounting

________ goals relate to infrequently purchased, expensive tangible items.

durable-product

every decision involves uncertainty, which is referred to as

evaluating risk

which of the following is correct

food and clothing are consumable-product goals

Which of the following is an example of a financial opportunity cost?

forgoing wages to attend sc hool

An investor should expect to receive a risk premium for

higher uncertainty about getting his money bacl

The goal of investing $50 per month for the next 12 years for your nephew's college fund is a(n) ________ goal.

longterm

increased consumer saving and investing is likely to be accompanied by

lower interest rates

the present value of a future amount of money will be greater the

lower the interest rate

according to the concept of time value of money

money is more valuable to a person sooner it is recieved

I can invest a dollar today and earn interest on it, then it should be worth ________ in the future.

more

attempts to increase income though employment are part of the --- component of financial planning

obtaining

which of the following would increase the interest rate for a loan

poor credit rating

changed in personal, social and economic factors may require you to

review and revise your financial plan more frequently

making financial decisions related to income involves all fo the following except

taking

the future value of a sum of money refers to

the amount which some current sum of money will grow over time

the consumer price index measures

the average change in prices of a fixed basket of goods and services of urban consumers

interest is

the price paid for the use of money

the rule of 72

used to estimate how fast prices will double given annual inflation rates

opportunity cost refers to

what you give up my making a choice


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