Time Value of Money

What is the primary concept illustrated by the preference to receive $1,000 today rather than a year from now, as explained in the Appendix Preview?

According to the 'Nature of Interest' section, which of the following is NOT one of the three essential elements on which the amount of interest is based?

How is simple interest computed according to the text on page G-2?

In the example from Illustration G-2, what is the total amount of compound interest earned over three years on a $1,000 deposit at 9 percent?

What is the formula for the future value of a single amount as shown in Illustration G-3?

Using Table 1 on page G-4, what is the future value of $1,000 invested for 10 years at 10 percent interest compounded annually?

What is the term for a series of equal dollar amounts to be paid or received at evenly spaced time intervals?

In the example in Illustration G-7, why does the $2,000 investment made at the end of year 3 not earn any interest?

Using Table 2, what is the future value of an annuity of $2,500 invested at the end of each year for 4 years at 6 percent interest?

The process of determining the value now of a given amount to be paid or received in the future is known as what?

Using the formula on page G-7, what is the present value of $1,000 to be received in two years, discounted at a rate of 10 percent?

According to Table 3 on page G-8, what is the present value of $1 to be received 10 years from now, using a discount rate of 8 percent?

In the demonstration problem in Illustration G-12, what is the present value of a $10,000 lottery winning to be received in 3 years, using an 8 percent discount rate?

What is the present value of an annuity?

Using Table 4, what is the present value of an annuity of $1,000 received annually for 3 years, discounted at 10 percent?

When discounting is done over shorter periods of time like semiannually, what must be done to the annual interest rate and the number of periods?

To compute the present value of a bond, which two components must be discounted?

Based on Illustration G-19, what is the present value of a 5-year, 10% bond with a face value of $100,000, when the discount rate is also 10%?

What is the present value of a 5-year, 10% bond with a face value of $100,000, if the market discount rate is 12%? Use the information from Illustration G-20.

Which of the following is NOT one of the five most common keys on a financial calculator for solving time value of money problems, as shown in Illustration G-22?