HW 3 Video
How would a decrease in the interest rate effect the future value of a lump sum, single amount problem (all other variables remain the same)?
Decrease the future value.
How would an increase in the interest rate effect the present value of an annuity problem (all other variables remain the same)?
Decrease the present value
The variables in a present value of a lump sum problem include all of the following, except:
Free Cash Flow
The variable that you are solving for in a future value of a lump sum problem is:
Future value
How would a decrease in the interest rate effect the present value of a lump sum, single amount problem (all other variables remain the same)?
Increase the present value
Which loan type requires calls for the borrower to pay interest each period and to repay the entire principal at some point in the future?
Interest-only
A common error made when solving a future value of an annuity problem is:
Multiplying the annual deposit and the number of years before calculating the problem
The variable that you are solving for in a present value of an annuity problem is:
The Present Value
Suppose a business takes out a $7,000, five-year loan at 6 percent that will be paid annually with a single, fixed payment each period. How much will be the annual payment?
$1,661.88
What is the future value of $1,000 invested for 15 years at a rate of 5%?
$2,079
What is the future value of $500 invested each year for 20 years at a rate of 10%?
$28,637
What is the present value of $400 invested each year for 12 years at a rate of 6%?
$3,354
What is the future value of $1,200 invested for 20 years at a rate of 6%?
$3,849
What is the present value of $500 invested each year for 10 years at a rate of 5%?
$3,861
What is the present value of $1,000 to be received in 12 years invested at a rate of 8%?
$397
What is the present value of $1,200 to be received in 18 years invested at a rate of 5%?
$499
What is the future value of $400 invested each year for 15 years at a rate of 6%?
$9,310
The variables in a future value of a lump sum problem include all of the following, except:
-Payments -Annuity Payments -Usage
The variables in a present value of an annuity problem include all of the following, except:
Source of funds
The variables in a present value of a lump sum problem include all of the following, except:
Payments
The variable that you are solving for in a present value of a lump sum problem is:
Present value
Which loan type requires the borrower to repay a single lump sum payment at some time in the future with interest?
Pure Discount
The variables in a present value of an annuity problem include all of the following, except:
Risk Profile
The variables in a future value of a lump sum problem include all of the following, except:
Volatility