Time Value of Money

What is the primary purpose of constructing a time line in time value analysis?

What is the process of determining the final value of a cash flow or series of cash flows when compound interest is applied?

If you deposit 100 dollars into an account that pays a guaranteed 5 percent interest each year, how much would you have at the end of Year 3?

What is the term for the rate of return you could earn on an alternative investment of similar risk?

How much would 1,000,000 dollars due in 100 years be worth today if the discount rate was 20 percent?

If you deposit 2,000 dollars in a bank account that pays 6 percent interest annually, how much will be in your account after 5 years?

An annuity where payments occur at the end of each period is known as what?

What is the future value of a 5-year ordinary annuity that pays 800 dollars each year if the interest rate is 5 percent?

Why does an annuity due always have a higher future value than an otherwise similar ordinary annuity?

What is the present value of a perpetuity that pays 1,000 dollars per year if the appropriate interest rate is 5 percent?

What is the term for a series of cash flows where the amount varies from one period to the next?

What is the future value of an uneven cash flow stream consisting of a 100 dollar inflow at the end of year 1, a 150 dollar inflow at the end of year 2, and a 300 dollar inflow at the end of year 3, if the appropriate interest rate is 15 percent?

In a loan amortization schedule, how is the interest portion of each payment calculated?

If you borrow 30,000 dollars on a student loan at a rate of 8 percent and must repay it in three equal installments at the end of each of the next 3 years, how much would your annual payment be?

When comparing different investment or loan options, what is the term for the quoted or stated interest rate that credit card companies and other lenders are required to report?

What is the future value of 100 dollars after 3 years if the appropriate interest rate is 8 percent compounded monthly?

What is the present value of 100 dollars due in 3 years if the appropriate interest rate is 8 percent compounded annually?

How long would it take for 1,000 dollars to double if it was invested in a bank that paid 6 percent per year?

A U.S. Treasury bond is offered for 585.43 dollars and will be redeemed for 1,000 dollars when it matures 10 years from now. What interest rate would you earn if you bought this bond?

If you need to accumulate 10,000 dollars in 5 years and can earn a return of 6 percent on your savings, how large must your annual end-of-year deposits be, assuming you start with zero savings?

If you can only save 1,200 dollars per year at an interest rate of 6 percent, how long would it take to reach a 10,000 dollar goal, assuming end-of-year deposits?

If you can save 1,200 dollars annually and need to accumulate 10,000 dollars in 5 years, what rate of return would you need to earn?

What distinguishes a perpetuity from a standard annuity?

What distinguishes the cash flows in an uneven cash flow stream from those in an annuity?

What is the present value of the following uneven cash flow stream: 0 dollars at Time 0, 100 dollars in Year 1, 200 dollars in Year 2, 0 dollars in Year 3, and 400 dollars in Year 4, if the interest rate is 8 percent?