TVM Quiz

Suppose you invest $1,000 today, compounded quarterly, with the annual interest rate of 8.00%. What is your investment worth in one year

$1,082.43

What if Jennifer were to invest $2,750 today, compounded semiannually, with an annual interest rate of 5.25%. What amount of interest will Jennifer earn in one year?

$146.27

You need $18,000 at the end of 4 years. If you can earn 0.325% per month, how much would you need to invest today to meet your objective?

$15,404

Johnson has an annuity due that pays $600 per year for 15 years. (Note: There are 15 annual cash flows with the first cash flow occurring today.) What is the value of the cash flows 14 years from today (immediately after the last deposit is made) if they are placed in an account that earns 7.50%?

$15,671.02

Rodney invests $2,400 today, compounded monthly, with an annual interest rate of 6.25%. What is Rodney's investment worth in one year?

$2,554.37

You have a choice between a lottery lump sum payout of $3,300,000 today or a series of twenty annual annuity due payments. At a discount rate of 5.00%, how large must the annual annuity due payments be to make you indifferent between the two choices? Use a calculator to determine your answer.

$252,190.99

Given the following cash flows, what is the future value at year six when compounded at an annual interest rate of 8.0%? Year 0 2 4 6 Cash Flow (Respectively) $9,000 $7,000 $5,000 $11,000

$40,637.29

You plan to place a $55,000 down payment on a lake cabin in Southern Oregon in five years. If you invest in a long-term CD earning an annual rate of 4.50%, how much would you need to invest today to have enough for the down payment in five years?

$44,135

Your father spent all of his adult life working in a small T-shirt making firm. His first year sales were $98,000 and his last year sales were $350,000. If the firm grew at an average rate of 3.35% per year, how many years did your father sell T-shirts at his firm?

38.63 years

The survey results from the National Association of Colleges and Employers (NACE) show the average annual increases in salaries for new accounting graduates to be 3.42% since the year 2000. If new starting salaries in accounting were $36,919 in 2000, what were they in 2016?

$63,230

Your department at work places $8,000 every year-end into an account earning 5%. The money is used when the corporate office fails to fully finance your profitable projects. The money has not been touched since the first deposit was made exactly six years ago. If the most recent deposit was made today, how much money is currently in the account?

$65,136.07

Your grandmother places $13,000 into an account earning an interest rate of 7% per year. After 5 years the account will be valued at $18,233.17. Which of the following statements is CORRECT?

The principal is $13,000, the time period is 5 years, the future value is $18,233.17, and the interest rate is 7%.

Which is greater, the present value of a five-year ordinary annuity of $300 discounted at 10%, or the present value of a five-year ordinary annuity of $300 discounted at 0% that has its first cash flow six years from today?

The second annuity because the cash flows are discounted at a 0% interest rate.

Kirby Puckett became the first $3,000,000 man in major league baseball in 1990. By 2008, A-Rod was bringing in $27,500,000 per year. Did the annual change in the highest annual baseball salary rise more rapidly over this time period than from 1930 to 1990? Babe Ruth had the highest salary and made $80,000 in 1930.

Yes, because the annual rate of change was 13.10% in the more recent period and only 6.23% in the earlier period.