Test Bank Financial Accounting Information for Decisions 9th Edition By John Wild A+

$35.00
Test Bank Financial Accounting Information for Decisions 9th Edition By John Wild A+

Test Bank Financial Accounting Information for Decisions 9th Edition By John Wild A+

$35.00
Test Bank Financial Accounting Information for Decisions 9th Edition By John Wild A+

1) Interest is the borrower's payment to the owner of an asset, for its use.

Answer: TRUE

Difficulty: 1 Easy

Topic: Present and Future Value Concepts

Learning Objective: B-C1 Describe the earning of interest and the concepts of present and future values.

Bloom's: Remember

AACSB: Communication

AICPA: BB Industry; FN Measurement

2) From the perspective of an account holder, a savings account is a liability with interest.

Answer: FALSE

Difficulty: 1 Easy

Topic: Present and Future Value Concepts

Learning Objective: B-C1 Describe the earning of interest and the concepts of present and future values.

Bloom's: Remember

AACSB: Communication

AICPA: BB Industry; FN Measurement

3) An interest rate is also called a discount rate.

Answer: TRUE

Difficulty: 1 Easy

Topic: Present Value of a Single Amount

Learning Objective: B-P1 Apply present value concepts to a single amount by using interest tables.

Bloom's: Remember

AACSB: Communication

AICPA: BB Industry; FN Measurement

4) Present and future value computations enable companies to measure or estimate the interest component of holding assets or liabilities over time.

Answer: TRUE

Difficulty: 2 Medium

Topic: Present and Future Value Concepts

Learning Objective: B-C1 Describe the earning of interest and the concepts of present and future values.

Bloom's: Understand

AACSB: Communication

AICPA: BB Industry; FN Measurement

5) The number of periods in a present value calculation may only be expressed in years.

Answer: FALSE

Difficulty: 1 Easy

Topic: Present Value of a Single Amount

Learning Objective: B-P1 Apply present value concepts to a single amount by using interest tables.

Bloom's: Remember

AACSB: Communication

AICPA: BB Industry; FN Measurement

6) Present Value of 1

Periods

3%

4%

5%

6%

7%

8%

9%

10%

12%

3

0.9151

0.8890

0.8638

0.8396

0.8163

0.7938

0.7722

0.7513

0.7118

4

0.8885

0.8548

0.8227

0.7921

0.7629

0.7350

0.7084

0.6830

0.6355

5

0.8626

0.8219

0.7835

0.7473

0.7130

0.6806

0.6499

0.6209

0.5674

6

0.8375

0.7903

0.7462

0.7050

0.6663

0.6302

0.5963

0.5645

0.5066

7

0.8131

0.7599

0.7107

0.6651

0.6227

0.5835

0.5470

0.5132

0.4523

8

0.7894

0.7307

0.6768

0.6274

0.5820

0.5403

0.5019

0.4665

0.4039

9

0.7664

0.7026

0.6446

0.5919

0.5439

0.5002

0.4604

0.4241

0.3606

10

0.7441

0.6756

0.6139

0.5584

0.5083

0.4632

0.4224

0.3855

0.3220

Future Value of 1

Periods

3%

4%

5%

6%

7%

8%

9%

10%

12%

3

1.0927

1.1249

1.1576

1.1910

1.2250

1.2597

1.2950

1.3310

1.4049

4

1.1255

1.1699

1.2155

1.2625

1.3108

1.3605

1.4116

1.4641

1.5735

5

1.1593

1.2167

1.2763

1.3382

1.4026

1.4693

1.5386

1.6105

1.7623

6

1.1941

1.2653

1.3401

1.4185

1.5007

1.5869

1.6771

1.7716

1.9738

7

1.2299

1.3159

1.4071

1.5036

1.6058

1.7138

1.8280

1.9487

2.2107

8

1.2668

1.3686

1.4775

1.5938

1.7182

1.8509

1.9926

2.1436

2.4760

9

1.3048

1.4233

1.5513

1.6895

1.8385

1.9990

2.1719

2.3579

2.7731

10

1.3439

1.4802

1.6289

1.7908

1.9672

2.1589

2.3674

2.5937

3.1058

Present Value of an Annuity of 1

Periods

3%

4%

5%

6%

7%

8%

9%

10%

12%

3

2.8286

2.7751

2.7232

2.6730

2.6243

2.5771

2.5313

2.4869

2.4018

4

3.7171

3.6299

3.5460

3.4651

3.3872

3.3121

3.2397

3.1699

3.0373

5

4.5797

4.4518

4.3295

4.2124

4.1002

3.9927

3.8897

3.7908

3.6048

6

5.4172

5.2421

5.0757

4.9173

4.7665

4.6229

4.4859

4.3553

4.1114

7

6.2303

6.0021

5.7864

5.5824

5.3893

5.2064

5.0330

4.8684

4.5638

8

7.0197

6.7327

6.4632

6.2098

5.9713

5.7466

5.5348

5.3349

4.9676

9

7.7861

7.4353

7.1078

6.8017

6.5152

6.2469

5.9952

5.7950

5.3282

10

8.5302

8.1109

7.7217

7.3601

7.0236

6.7101

6.4177

6.1446

5.6502

Future Value of an Annuity of 1

Periods

3%

4%

5%

6%

7%

8%

9%

10%

12%

3

3.0909

3.1216

3.1525

3.1836

3.2149

3.2464

3.2781

3.3100

3.3744

4

4.1836

4.2465

4.3101

4.3746

4.4399

4.5061

4.5731

4.6410

4.7793

5

5.3091

5.4163

5.5256

5.6371

5.7507

5.8666

5.9847

6.1051

6.3528

6

6.4684

6.6330

6.8019

6.9753

7.1533

7.3359

7.5233

7.7156

8.1152

7

7.6625

7.8983

8.1420

8.3938

8.6540

8.9228

9.2004

9.4872

10.0890

8

8.8923

9.2142

9.5491

9.8975

10.2598

10.6366

11.0285

11.4359

12.2997

9

10.1591

10.5828

11.0266

11.4913

11.9780

12.4876

13.0210

13.5795

14.7757

10

11.4639

12.0061

12.5779

13.1808

13.8164

14.4866

15.1929

15.9374

17.5487

The present value factor for determining the present value of $6,300 to be received three years from today at 10% interest compounded semiannually is 0.7462. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.)

Answer: TRUE

Difficulty: 2 Medium

Topic: Present Value of a Single Amount

Learning Objective: B-P1 Apply present value concepts to a single amount by using interest tables.

Bloom's: Understand

AACSB: Communication

AICPA: BB Industry; FN Measurement

7) The present value of 1 formula is often useful when a borrowed asset must be repaid in full at a later date and the borrower wants to know the worth of the asset at the future date.

Answer: FALSE

Difficulty: 2 Medium

Topic: Present Value of a Single Amount

Learning Objective: B-P1 Apply present value concepts to a single amount by using interest tables.

Bloom's: Understand

AACSB: Communication

AICPA: BB Industry; FN Measurement

8) In a present value or future value table, the length of one time period may be interpreted as one year, one month, or any other length of time.

Answer: TRUE

Difficulty: 1 Easy

Topic: Present Value of a Single Amount; Future Value of Single Amount

Learning Objective: B-P1 Apply present value concepts to a single amount by using interest tables.; B-P2 Apply future value concepts to a single amount by using interest tables.

Bloom's: Remember

AACSB: Communication

AICPA: BB Industry; FN Measurement

9) Present Value of 1

Periods

3%

4%

5%

6%

7%

8%

9%

10%

12%

3

0.9151

0.8890

0.8638

0.8396

0.8163

0.7938

0.7722

0.7513

0.7118

4

0.8885

0.8548

0.8227

0.7921

0.7629

0.7350

0.7084

0.6830

0.6355

5

0.8626

0.8219

0.7835

0.7473

0.7130

0.6806

0.6499

0.6209

0.5674

6

0.8375

0.7903

0.7462

0.7050

0.6663

0.6302

0.5963

0.5645

0.5066

7

0.8131

0.7599

0.7107

0.6651

0.6227

0.5835

0.5470

0.5132

0.4523

8

0.7894

0.7307

0.6768

0.6274

0.5820

0.5403

0.5019

0.4665

0.4039

9

0.7664

0.7026

0.6446

0.5919

0.5439

0.5002

0.4604

0.4241

0.3606

10

0.7441

0.6756

0.6139

0.5584

0.5083

0.4632

0.4224

0.3855

0.3220

Future Value of 1

Periods

3%

4%

5%

6%

7%

8%

9%

10%

12%

3

1.0927

1.1249

1.1576

1.1910

1.2250

1.2597

1.2950

1.3310

1.4049

4

1.1255

1.1699

1.2155

1.2625

1.3108

1.3605

1.4116

1.4641

1.5735

5

1.1593

1.2167

1.2763

1.3382

1.4026

1.4693

1.5386

1.6105

1.7623

6

1.1941

1.2653

1.3401

1.4185

1.5007

1.5869

1.6771

1.7716

1.9738

7

1.2299

1.3159

1.4071

1.5036

1.6058

1.7138

1.8280

1.9487

2.2107

8

1.2668

1.3686

1.4775

1.5938

1.7182

1.8509

1.9926

2.1436

2.4760

9

1.3048

1.4233

1.5513

1.6895

1.8385

1.9990

2.1719

2.3579

2.7731

10

1.3439

1.4802

1.6289

1.7908

1.9672

2.1589

2.3674

2.5937

3.1058

Present Value of an Annuity of 1

Periods

3%

4%

5%

6%

7%

8%

9%

10%

12%

3

2.8286

2.7751

2.7232

2.6730

2.6243

2.5771

2.5313

2.4869

2.4018

4

3.7171

3.6299

3.5460

3.4651

3.3872

3.3121

3.2397

3.1699

3.0373

5

4.5797

4.4518

4.3295

4.2124

4.1002

3.9927

3.8897

3.7908

3.6048

6

5.4172

5.2421

5.0757

4.9173

4.7665

4.6229

4.4859

4.3553

4.1114

7

6.2303

6.0021

5.7864

5.5824

5.3893

5.2064

5.0330

4.8684

4.5638

8

7.0197

6.7327

6.4632

6.2098

5.9713

5.7466

5.5348

5.3349

4.9676

9

7.7861

7.4353

7.1078

6.8017

6.5152

6.2469

5.9952

5.7950

5.3282

10

8.5302

8.1109

7.7217

7.3601

7.0236

6.7101

6.4177

6.1446

5.6502

Future Value of an Annuity of 1

Periods

3%

4%

5%

6%

7%

8%

9%

10%

12%

3

3.0909

3.1216

3.1525

3.1836

3.2149

3.2464

3.2781

3.3100

3.3744

4

4.1836

4.2465

4.3101

4.3746

4.4399

4.5061

4.5731

4.6410

4.7793

5

5.3091

5.4163

5.5256

5.6371

5.7507

5.8666

5.9847

6.1051

6.3528

6

6.4684

6.6330

6.8019

6.9753

7.1533

7.3359

7.5233

7.7156

8.1152

7

7.6625

7.8983

8.1420

8.3938

8.6540

8.9228

9.2004

9.4872

10.0890

8

8.8923

9.2142

9.5491

9.8975

10.2598

10.6366

11.0285

11.4359

12.2997

9

10.1591

10.5828

11.0266

11.4913

11.9780

12.4876

13.0210

13.5795

14.7757

10

11.4639

12.0061

12.5779

13.1808

13.8164

14.4866

15.1929

15.9374

17.5487

The present value of $2,000 to be received nine years from today at 8% interest compounded annually is $1,000.40. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.)

Answer: TRUE

Explanation: Present Value = Future Value × Interest Factor for 9 years @8%

Present Value = $2,000 × 0.5002 = $1,000.40

Difficulty: 2 Medium

Topic: Present Value of a Single Amount

Learning Objective: B-P1 Apply present value concepts to a single amount by using interest tables.

Bloom's: Apply

AACSB: Analytical Thinking

AICPA: BB Industry; FN Measurement

10) Present Value of 1

Periods

3%

4%

5%

6%

7%

8%

9%

10%

12%

3

0.9151

0.8890

0.8638

0.8396

0.8163

0.7938

0.7722

0.7513

0.7118

4

0.8885

0.8548

0.8227

0.7921

0.7629

0.7350

0.7084

0.6830

0.6355

5

0.8626

0.8219

0.7835

0.7473

0.7130

0.6806

0.6499

0.6209

0.5674

6

0.8375

0.7903

0.7462

0.7050

0.6663

0.6302

0.5963

0.5645

0.5066

7

0.8131

0.7599

0.7107

0.6651

0.6227

0.5835

0.5470

0.5132

0.4523

8

0.7894

0.7307

0.6768

0.6274

0.5820

0.5403

0.5019

0.4665

0.4039

9

0.7664

0.7026

0.6446

0.5919

0.5439

0.5002

0.4604

0.4241

0.3606

10

0.7441

0.6756

0.6139

0.5584

0.5083

0.4632

0.4224

0.3855

0.3220

Future Value of 1

Periods

3%

4%

5%

6%

7%

8%

9%

10%

12%

3

1.0927

1.1249

1.1576

1.1910

1.2250

1.2597

1.2950

1.3310

1.4049

4

1.1255

1.1699

1.2155

1.2625

1.3108

1.3605

1.4116

1.4641

1.5735

5

1.1593

1.2167

1.2763

1.3382

1.4026

1.4693

1.5386

1.6105

1.7623

6

1.1941

1.2653

1.3401

1.4185

1.5007

1.5869

1.6771

1.7716

1.9738

7

1.2299

1.3159

1.4071

1.5036

1.6058

1.7138

1.8280

1.9487

2.2107

8

1.2668

1.3686

1.4775

1.5938

1.7182

1.8509

1.9926

2.1436

2.4760

9

1.3048

1.4233

1.5513

1.6895

1.8385

1.9990

2.1719

2.3579

2.7731

10

1.3439

1.4802

1.6289

1.7908

1.9672

2.1589

2.3674

2.5937

3.1058

Present Value of an Annuity of 1

Periods

3%

4%

5%

6%

7%

8%

9%

10%

12%

3

2.8286

2.7751

2.7232

2.6730

2.6243

2.5771

2.5313

2.4869

2.4018

4

3.7171

3.6299

3.5460

3.4651

3.3872

3.3121

3.2397

3.1699

3.0373

5

4.5797

4.4518

4.3295

4.2124

4.1002

3.9927

3.8897

3.7908

3.6048

6

5.4172

5.2421

5.0757

4.9173

4.7665

4.6229

4.4859

4.3553

4.1114

7

6.2303

6.0021

5.7864

5.5824

5.3893

5.2064

5.0330

4.8684

4.5638

8

7.0197

6.7327

6.4632

6.2098

5.9713

5.7466

5.5348

5.3349

4.9676

9

7.7861

7.4353

7.1078

6.8017

6.5152

6.2469

5.9952

5.7950

5.3282

10

8.5302

8.1109

7.7217

7.3601

7.0236

6.7101

6.4177

6.1446

5.6502

Future Value of an Annuity of 1

Periods

3%

4%

5%

6%

7%

8%

9%

10%

12%

3

3.0909

3.1216

3.1525

3.1836

3.2149

3.2464

3.2781

3.3100

3.3744

4

4.1836

4.2465

4.3101

4.3746

4.4399

4.5061

4.5731

4.6410

4.7793

5

5.3091

5.4163

5.5256

5.6371

5.7507

5.8666

5.9847

6.1051

6.3528

6

6.4684

6.6330

6.8019

6.9753

7.1533

7.3359

7.5233

7.7156

8.1152

7

7.6625

7.8983

8.1420

8.3938

8.6540

8.9228

9.2004

9.4872

10.0890

8

8.8923

9.2142

9.5491

9.8975

10.2598

10.6366

11.0285

11.4359

12.2997

9

10.1591

10.5828

11.0266

11.4913

11.9780

12.4876

13.0210

13.5795

14.7757

10

11.4639

12.0061

12.5779

13.1808

13.8164

14.4866

15.1929

15.9374

17.5487

Sandra has a savings account that has accumulated to $50,000. She started with $28,225, and earned interest at 10% compounded annually. It took her five years to accumulate the $50,000. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.)

Answer: FALSE

Explanation: PV Factor = Present Value/Future Value PV Factor = $28,225/$50,000 = 0.5645 0.5645 is the present value of 1 factor, 10%, 6 periods

Difficulty: 3 Hard

Topic: Present Value of a Single Amount

Learning Objective: B-P1 Apply present value concepts to a single amount by using interest tables.

Bloom's: Apply

AACSB: Analytical Thinking

AICPA: BB Industry; FN Measurement; BB Critical Thinking

11) Future value can be found if the interest rate (i), the number of periods (n), and the present value (p) are known.

Answer: TRUE

Difficulty: 1 Easy

Topic: Future Value of Single Amount

Learning Objective: B-P2 Apply future value concepts to a single amount by using interest tables.

Bloom's: Remember

AACSB: Communication

AICPA: BB Industry; FN Measurement

12) The number of periods in a future value calculation may only be expressed in years.

Answer: FALSE

Difficulty: 1 Easy

Topic: Future Value of Single Amount

Learning Objective: B-P2 Apply future value concepts to a single amount by using interest tables.

Bloom's: Remember

AACSB: Communication

AICPA: BB Industry; FN Measurement


Future Value of an Annuity of 1

Periods

3%

4%

5%

6%

7%

8%

9%

10%

12%

3

3.0909

3.1216

3.1525

3.1836

3.2149

3.2464

3.2781

3.3100

3.3744

4

4.1836

4.2465

4.3101

4.3746

4.4399

4.5061

4.5731

4.6410

4.7793

5

5.3091

5.4163

5.5256

5.6371

5.7507

5.8666

5.9847

6.1051

6.3528

6

6.4684

6.6330

6.8019

6.9753

7.1533

7.3359

7.5233

7.7156

8.1152

7

7.6625

7.8983

8.1420

8.3938

8.6540

8.9228

9.2004

9.4872

10.0890

8

8.8923

9.2142

9.5491

9.8975

10.2598

10.6366

11.0285

11.4359

12.2997

9

10.1591

10.5828

11.0266

11.4913

11.9780

12.4876

13.0210

13.5795

14.7757

10

11.4639

12.0061

12.5779

13.1808

13.8164

14.4866

15.1929

15.9374

17.5487

The future value of $100 compounded semiannually for 3 years at 12% equals $140.49. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.)

Answer: FALSE

Explanation: Future Value = Present Value × Interest Factor

Future Value = $100 × 1.4185 = $141.85

Difficulty: 2 Medium

Topic: Future Value of Single Amount

Learning Objective: B-P2 Apply future value concepts to a single amount by using interest tables.

Bloom's: Apply

AACSB: Analytical Thinking

AICPA: BB Industry; FN Measurement

14) Present Value of 1

Periods

3%

4%

5%

6%

7%

8%

9%

10%

12%

3

0.9151

0.8890

0.8638

0.8396

0.8163

0.7938

0.7722

0.7513

0.7118

4

0.8885

0.8548

0.8227

0.7921

0.7629

0.7350

0.7084

0.6830

0.6355

5

0.8626

0.8219

0.7835

0.7473

0.7130

0.6806

0.6499

0.6209

0.5674

6

0.8375

0.7903

0.7462

0.7050

0.6663

0.6302

0.5963

0.5645

0.5066

7

0.8131

0.7599

0.7107

0.6651

0.6227

0.5835

0.5470

0.5132

0.4523

8

0.7894

0.7307

0.6768

0.6274

0.5820

0.5403

0.5019

0.4665

0.4039

9

0.7664

0.7026

0.6446

0.5919

0.5439

0.5002

0.4604

0.4241

0.3606

10

0.7441

0.6756

0.6139

0.5584

0.5083

0.4632

0.4224

0.3855

0.3220

Future Value of 1

Periods

3%

4%

5%

6%

7%

8%

9%

10%

12%

3

1.0927

1.1249

1.1576

1.1910

1.2250

1.2597

1.2950

1.3310

1.4049

4

1.1255

1.1699

1.2155

1.2625

1.3108

1.3605

1.4116

1.4641

1.5735

5

1.1593

1.2167

1.2763

1.3382

1.4026

1.4693

1.5386

1.6105

1.7623

6

1.1941

1.2653

1.3401

1.4185

1.5007

1.5869

1.6771

1.7716

1.9738

7

1.2299

1.3159

1.4071

1.5036

1.6058

1.7138

1.8280

1.9487

2.2107

8

1.2668

1.3686

1.4775

1.5938

1.7182

1.8509

1.9926

2.1436

2.4760

9

1.3048

1.4233

1.5513

1.6895

1.8385

1.9990

2.1719

2.3579

2.7731

10

1.3439

1.4802

1.6289

1.7908

1.9672

2.1589

2.3674

2.5937

3.1058

Present Value of an Annuity of 1

Periods

3%

4%

5%

6%

7%

8%

9%

10%

12%

3

2.8286

2.7751

2.7232

2.6730

2.6243

2.5771

2.5313

2.4869

2.4018

4

3.7171

3.6299

3.5460

3.4651

3.3872

3.3121

3.2397

3.1699

3.0373

5

4.5797

4.4518

4.3295

4.2124

4.1002

3.9927

3.8897

3.7908

3.6048

6

5.4172

5.2421

5.0757

4.9173

4.7665

4.6229

4.4859

4.3553

4.1114

7

6.2303

6.0021

5.7864

5.5824

5.3893

5.2064

5.0330

4.8684

4.5638

8

7.0197

6.7327

6.4632

6.2098

5.9713

5.7466

5.5348

5.3349

4.9676

9

7.7861

7.4353

7.1078

6.8017

6.5152

6.2469

5.9952

5.7950

5.3282

10

8.5302

8.1109

7.7217

7.3601

7.0236

6.7101

6.4177

6.1446

5.6502

Future Value of an Annuity of 1

Periods

3%

4%

5%

6%

7%

8%

9%

10%

12%

3

3.0909

3.1216

3.1525

3.1836

3.2149

3.2464

3.2781

3.3100

3.3744

4

4.1836

4.2465

4.3101

4.3746

4.4399

4.5061

4.5731

4.6410

4.7793

5

5.3091

5.4163

5.5256

5.6371

5.7507

5.8666

5.9847

6.1051

6.3528

6

6.4684

6.6330

6.8019

6.9753

7.1533

7.3359

7.5233

7.7156

8.1152

7

7.6625

7.8983

8.1420

8.3938

8.6540

8.9228

9.2004

9.4872

10.0890

8

8.8923

9.2142

9.5491

9.8975

10.2598

10.6366

11.0285

11.4359

12.2997

9

10.1591

10.5828

11.0266

11.4913

11.9780

12.4876

13.0210

13.5795

14.7757

10

11.4639

12.0061

12.5779

13.1808

13.8164

14.4866

15.1929

15.9374

17.5487

At an annual interest rate of 8% compounded annually, $5,300 will accumulate to a total of $7,210.65 in 5 years. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.)

Answer: FALSE

Explanation: FV Factor = Future Value/Present Value FV Factor = $7,210.65/$5,300 = 1.3605 1.3605 is the future value of $1 factor, 8%, 4 periods

Difficulty: 3 Hard

Topic: Future Value of Single Amount

Learning Objective: B-P2 Apply future value concepts to a single amount by using interest tables.

Bloom's: Apply

AACSB: Analytical Thinking

AICPA: BB Industry; FN Measurement

15) An annuity is a series of equal payments occurring at equal intervals.

Answer: TRUE

Difficulty: 1 Easy

Topic: Present Value of an Annuity

Learning Objective: B-P3 Apply present value concepts to an annuity by using interest tables.

Bloom's: Remember

AACSB: Communication

AICPA: BB Industry; FN Decision Making

16) The present value of an annuity table can be used to determine the value today of a series of payments to be received in the future.

Answer: TRUE

Difficulty: 1 Easy

Topic: Present Value of an Annuity

Learning Objective: B-P3 Apply present value concepts to an annuity by using interest tables.

Bloom's: Remember

AACSB: Communication

AICPA: BB Industry; FN Decision Making

17) A series of equal payments made or received at the end of each period is an ordinary annuity.

Answer: TRUE

Difficulty: 1 Easy

Topic: Present Value of an Annuity

Learning Objective: B-P3 Apply present value concepts to an annuity by using interest tables.

Bloom's: Remember

AACSB: Communication

AICPA: BB Industry; FN Decision Making

18) Present Value of 1

Periods

3%

4%

5%

6%

7%

8%

9%

10%

12%

3

0.9151

0.8890

0.8638

0.8396

0.8163

0.7938

0.7722

0.7513

0.7118

4

0.8885

0.8548

0.8227

0.7921

0.7629

0.7350

0.7084

0.6830

0.6355

5

0.8626

0.8219

0.7835

0.7473

0.7130

0.6806

0.6499

0.6209

0.5674

6

0.8375

0.7903

0.7462

0.7050

0.6663

0.6302

0.5963

0.5645

0.5066

7

0.8131

0.7599

0.7107

0.6651

0.6227

0.5835

0.5470

0.5132

0.4523

8

0.7894

0.7307

0.6768

0.6274

0.5820

0.5403

0.5019

0.4665

0.4039

9

0.7664

0.7026

0.6446

0.5919

0.5439

0.5002

0.4604

0.4241

0.3606

10

0.7441

0.6756

0.6139

0.5584

0.5083

0.4632

0.4224

0.3855

0.3220

Future Value of 1

Periods

3%

4%

5%

6%

7%

8%

9%

10%

12%

3

1.0927

1.1249

1.1576

1.1910

1.2250

1.2597

1.2950

1.3310

1.4049

4

1.1255

1.1699

1.2155

1.2625

1.3108

1.3605

1.4116

1.4641

1.5735

5

1.1593

1.2167

1.2763

1.3382

1.4026

1.4693

1.5386

1.6105

1.7623

6

1.1941

1.2653

1.3401

1.4185

1.5007

1.5869

1.6771

1.7716

1.9738

7

1.2299

1.3159

1.4071

1.5036

1.6058

1.7138

1.8280

1.9487

2.2107

8

1.2668

1.3686

1.4775

1.5938

1.7182

1.8509

1.9926

2.1436

2.4760

9

1.3048

1.4233

1.5513

1.6895

1.8385

1.9990

2.1719

2.3579

2.7731

10

1.3439

1.4802

1.6289

1.7908

1.9672

2.1589

2.3674

2.5937

3.1058

Present Value of an Annuity of 1

Periods

3%

4%

5%

6%

7%

8%

9%

10%

12%

3

2.8286

2.7751

2.7232

2.6730

2.6243

2.5771

2.5313

2.4869

2.4018

4

3.7171

3.6299

3.5460

3.4651

3.3872

3.3121

3.2397

3.1699

3.0373

5

4.5797

4.4518

4.3295

4.2124

4.1002

3.9927

3.8897

3.7908

3.6048

6

5.4172

5.2421

5.0757

4.9173

4.7665

4.6229

4.4859

4.3553

4.1114

7

6.2303

6.0021

5.7864

5.5824

5.3893

5.2064

5.0330

4.8684

4.5638

8

7.0197

6.7327

6.4632

6.2098

5.9713

5.7466

5.5348

5.3349

4.9676

9

7.7861

7.4353

7.1078

6.8017

6.5152

6.2469

5.9952

5.7950

5.3282

10

8.5302

8.1109

7.7217

7.3601

7.0236

6.7101

6.4177

6.1446

5.6502

Future Value of an Annuity of 1

Periods

3%

4%

5%

6%

7%

8%

9%

10%

12%

3

3.0909

3.1216

3.1525

3.1836

3.2149

3.2464

3.2781

3.3100

3.3744

4

4.1836

4.2465

4.3101

4.3746

4.4399

4.5061

4.5731

4.6410

4.7793

5

5.3091

5.4163

5.5256

5.6371

5.7507

5.8666

5.9847

6.1051

6.3528

6

6.4684

6.6330

6.8019

6.9753

7.1533

7.3359

7.5233

7.7156

8.1152

7

7.6625

7.8983

8.1420

8.3938

8.6540

8.9228

9.2004

9.4872

10.0890

8

8.8923

9.2142

9.5491

9.8975

10.2598

10.6366

11.0285

11.4359

12.2997

9

10.1591

10.5828

11.0266

11.4913

11.9780

12.4876

13.0210

13.5795

14.7757

10

11.4639

12.0061

12.5779

13.1808

13.8164

14.4866

15.1929

15.9374

17.5487

The present value of $5,000 per year for three years at 12% compounded annually is $12,009. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.)

Answer: TRUE

Explanation: 2.4018 is the PV factor on the Present Value of an Annuity table; n = 3; i = 12%

Present Value of an Annuity = Annuity × PV Factor

Present Value of an Annuity = $5,000 × 2.4018 = $12,009

Difficulty: 3 Hard

Topic: Present Value of an Annuity

Learning Objective: B-P3 Apply present value concepts to an annuity by using interest tables.

Bloom's: Apply

AACSB: Analytical Thinking

AICPA: BB Industry; FN Decision Making

19) Present Value of 1

Periods

3%

4%

5%

6%

7%

8%

9%

10%

12%

3

0.9151

0.8890

0.8638

0.8396

0.8163

0.7938

0.7722

0.7513

0.7118

4

0.8885

0.8548

0.8227

0.7921

0.7629

0.7350

0.7084

0.6830

0.6355

5

0.8626

0.8219

0.7835

0.7473

0.7130

0.6806

0.6499

0.6209

0.5674

6

0.8375

0.7903

0.7462

0.7050

0.6663

0.6302

0.5963

0.5645

0.5066

7

0.8131

0.7599

0.7107

0.6651

0.6227

0.5835

0.5470

0.5132

0.4523

8

0.7894

0.7307

0.6768

0.6274

0.5820

0.5403

0.5019

0.4665

0.4039

9

0.7664

0.7026

0.6446

0.5919

0.5439

0.5002

0.4604

0.4241

0.3606

10

0.7441

0.6756

0.6139

0.5584

0.5083

0.4632

0.4224

0.3855

0.3220

Future Value of 1

Periods

3%

4%

5%

6%

7%

8%

9%

10%

12%

3

1.0927

1.1249

1.1576

1.1910

1.2250

1.2597

1.2950

1.3310

1.4049

4

1.1255

1.1699

1.2155

1.2625

1.3108

1.3605

1.4116

1.4641

1.5735

5

1.1593

1.2167

1.2763

1.3382

1.4026

1.4693

1.5386

1.6105

1.7623

6

1.1941

1.2653

1.3401

1.4185

1.5007

1.5869

1.6771

1.7716

1.9738

7

1.2299

1.3159

1.4071

1.5036

1.6058

1.7138

1.8280

1.9487

2.2107

8

1.2668

1.3686

1.4775

1.5938

1.7182

1.8509

1.9926

2.1436

2.4760

9

1.3048

1.4233

1.5513

1.6895

1.8385

1.9990

2.1719

2.3579

2.7731

10

1.3439

1.4802

1.6289

1.7908

1.9672

2.1589

2.3674

2.5937

3.1058

Present Value of an Annuity of 1

Periods

3%

4%

5%

6%

7%

8%

9%

10%

12%

3

2.8286

2.7751

2.7232

2.6730

2.6243

2.5771

2.5313

2.4869

2.4018

4

3.7171

3.6299

3.5460

3.4651

3.3872

3.3121

3.2397

3.1699

3.0373

5

4.5797

4.4518

4.3295

4.2124

4.1002

3.9927

3.8897

3.7908

3.6048

6

5.4172

5.2421

5.0757

4.9173

4.7665

4.6229

4.4859

4.3553

4.1114

7

6.2303

6.0021

5.7864

5.5824

5.3893

5.2064

5.0330

4.8684

4.5638

8

7.0197

6.7327

6.4632

6.2098

5.9713

5.7466

5.5348

5.3349

4.9676

9

7.7861

7.4353

7.1078

6.8017

6.5152

6.2469

5.9952

5.7950

5.3282

10

8.5302

8.1109

7.7217

7.3601

7.0236

6.7101

6.4177

6.1446

5.6502

Future Value of an Annuity of 1

Present Value of an Annuity = Annuity × PV Factor

Present Value of an Annuity = $10,000 × 3.4651 = $34,651.

Difficulty: 3 Hard

Topic: Present Value of an Annuity

Learning Objective: B-P3 Apply present value concepts to an annuity by using interest tables.

Bloom's: Apply

AACSB: Analytical Thinking

AICPA: BB Industry; FN Decision Making

20) Present Value of 1

Periods

3%

4%

5%

6%

7%

8%

9%

10%

12%

3

0.9151

0.8890

0.8638

0.8396

0.8163

0.7938

0.7722

0.7513

0.7118

4

0.8885

0.8548

0.8227

0.7921

0.7629

0.7350

0.7084

0.6830

0.6355

5

0.8626

0.8219

0.7835

0.7473

0.7130

0.6806

0.6499

0.6209

0.5674

6

0.8375

0.7903

0.7462

0.7050

0.6663

0.6302

0.5963

0.5645

0.5066

7

0.8131

0.7599

0.7107

0.6651

0.6227

0.5835

0.5470

0.5132

0.4523

8

0.7894

0.7307

0.6768

0.6274

0.5820

0.5403

0.5019

0.4665

0.4039

9

0.7664

0.7026

0.6446

0.5919

0.5439

0.5002

0.4604

0.4241

0.3606

10

0.7441

0.6756

0.6139

0.5584

0.5083

0.4632

0.4224

0.3855

0.3220

Future Value of 1

Periods

3%

4%

5%

6%

7%

8%

9%

10%

12%

3

1.0927

1.1249

1.1576

1.1910

1.2250

1.2597

1.2950

1.3310

1.4049

4

1.1255

1.1699

1.2155

1.2625

1.3108

1.3605

1.4116

1.4641

1.5735

5

1.1593

1.2167

1.2763

1.3382

1.4026

1.4693

1.5386

1.6105

1.7623

6

1.1941

1.2653

1.3401

1.4185

1.5007

1.5869

1.6771

1.7716

1.9738

7

1.2299

1.3159

1.4071

1.5036

1.6058

1.7138

1.8280

1.9487

2.2107

8

1.2668

1.3686

1.4775

1.5938

1.7182

1.8509

1.9926

2.1436

2.4760

9

1.3048

1.4233

1.5513

1.6895

1.8385

1.9990

2.1719

2.3579

2.7731

10

1.3439

1.4802

1.6289

1.7908

1.9672

2.1589

2.3674

2.5937

3.1058

Present Value of an Annuity of 1

Periods

3%

4%

5%

6%

7%

8%

9%

10%

12%

3

2.8286

2.7751

2.7232

2.6730

2.6243

2.5771

2.5313

2.4869

2.4018

4

3.7171

3.6299

3.5460

3.4651

3.3872

3.3121

3.2397

3.1699

3.0373

5

4.5797

4.4518

4.3295

4.2124

4.1002

3.9927

3.8897

3.7908

3.6048

6

5.4172

5.2421

5.0757

4.9173

4.7665

4.6229

4.4859

4.3553

4.1114

7

6.2303

6.0021

5.7864

5.5824

5.3893

5.2064

5.0330

4.8684

4.5638

8

7.0197

6.7327

6.4632

6.2098

5.9713

5.7466

5.5348

5.3349

4.9676

9

7.7861

7.4353

7.1078

6.8017

6.5152

6.2469

5.9952

5.7950

5.3282

10

8.5302

8.1109

7.7217

7.3601

7.0236

6.7101

6.4177

6.1446

5.6502

Future Value of an Annuity of 1

Periods

3%

4%

5%

6%

7%

8%

9%

10%

12%

3

3.0909

3.1216

3.1525

3.1836

3.2149

3.2464

3.2781

3.3100

3.3744

4

4.1836

4.2465

4.3101

4.3746

4.4399

4.5061

4.5731

4.6410

4.7793

5

5.3091

5.4163

5.5256

5.6371

5.7507

5.8666

5.9847

6.1051

6.3528

6

6.4684

6.6330

6.8019

6.9753

7.1533

7.3359

7.5233

7.7156

8.1152

7

7.6625

7.8983

8.1420

8.3938

8.6540

8.9228

9.2004

9.4872

10.0890

8

8.8923

9.2142

9.5491

9.8975

10.2598

10.6366

11.0285

11.4359

12.2997

9

10.1591

10.5828

11.0266

11.4913

11.9780

12.4876

13.0210

13.5795

14.7757

10

11.4639

12.0061

12.5779

13.1808

13.8164

14.4866

15.1929

15.9374

17.5487

The present value of eight $5,000 semiannual payments invested for 4 years at 8% compounded semiannually is $33,663.50. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.)

Answer: TRUE

Explanation: 6.7327 is the PV factor on the Present Value of an Annuity table; n = 8; i = 4%

Present Value of an Annuity = Annuity × PV Factor

Present Value of an Annuity = $5,000 × 6.7327 = $33,663.50.

Difficulty: 3 Hard

Topic: Present Value of an Annuity

Learning Objective: B-P3 Apply present value concepts to an annuity by using interest tables.

Bloom's: Apply

AACSB: Analytical Thinking

AICPA: BB Industry; FN Decision Making

21) Present Value of 1

Periods

3%

4%

5%

6%

7%

8%

9%

10%

12%

3

0.9151

0.8890

0.8638

0.8396

0.8163

0.7938

0.7722

0.7513

0.7118

4

0.8885

0.8548

0.8227

0.7921

0.7629

0.7350

0.7084

0.6830

0.6355

5

0.8626

0.8219

0.7835

0.7473

0.7130

0.6806

0.6499

0.6209

0.5674

6

0.8375

0.7903

0.7462

0.7050

0.6663

0.6302

0.5963

0.5645

0.5066

7

0.8131

0.7599

0.7107

0.6651

0.6227

0.5835

0.5470

0.5132

0.4523

8

0.7894

0.7307

0.6768

0.6274

0.5820

0.5403

0.5019

0.4665

0.4039

9

0.7664

0.7026

0.6446

0.5919

0.5439

0.5002

0.4604

0.4241

0.3606

10

0.7441

0.6756

0.6139

0.5584

0.5083

0.4632

0.4224

0.3855

0.3220

Future Value of 1

Periods

3%

4%

5%

6%

7%

8%

9%

10%

12%

3

1.0927

1.1249

1.1576

1.1910

1.2250

1.2597

1.2950

1.3310

1.4049

4

1.1255

1.1699

1.2155

1.2625

1.3108

1.3605

1.4116

1.4641

1.5735

5

1.1593

1.2167

1.2763

1.3382

1.4026

1.4693

1.5386

1.6105

1.7623

6

1.1941

1.2653

1.3401

1.4185

1.5007

1.5869

1.6771

1.7716

1.9738

7

1.2299

1.3159

1.4071

1.5036

1.6058

1.7138

1.8280

1.9487

2.2107

8

1.2668

1.3686

1.4775

1.5938

1.7182

1.8509

1.9926

2.1436

2.4760

9

1.3048

1.4233

1.5513

1.6895

1.8385

1.9990

2.1719

2.3579

2.7731

10

1.3439

1.4802

1.6289

1.7908

1.9672

2.1589

2.3674

2.5937

3.1058

Present Value of an Annuity of 1

Periods

3%

4%

5%

6%

7%

8%

9%

10%

12%

3

2.8286

2.7751

2.7232

2.6730

2.6243

2.5771

2.5313

2.4869

2.4018

4

3.7171

3.6299

3.5460

3.4651

3.3872

3.3121

3.2397

3.1699

3.0373

5

4.5797

4.4518

4.3295

4.2124

4.1002

3.9927

3.8897

3.7908

3.6048

6

5.4172

5.2421

5.0757

4.9173

4.7665

4.6229

4.4859

4.3553

4.1114

7

6.2303

6.0021

5.7864

5.5824

5.3893

5.2064

5.0330

4.8684

4.5638

8

7.0197

6.7327

6.4632

6.2098

5.9713

5.7466

5.5348

5.3349

4.9676

9

7.7861

7.4353

7.1078

6.8017

6.5152

6.2469

5.9952

5.7950

5.3282

10

8.5302

8.1109

7.7217

7.3601

7.0236

6.7101

6.4177

6.1446

5.6502

Future Value of an Annuity of 1

Periods

3%

4%

5%

6%

7%

8%

9%

10%

12%

3

3.0909

3.1216

3.1525

3.1836

3.2149

3.2464

3.2781

3.3100

3.3744

4

4.1836

4.2465

4.3101

4.3746

4.4399

4.5061

4.5731

4.6410

4.7793

5

5.3091

5.4163

5.5256

5.6371

5.7507

5.8666

5.9847

6.1051

6.3528

6

6.4684

6.6330

6.8019

6.9753

7.1533

7.3359

7.5233

7.7156

8.1152

7

7.6625

7.8983

8.1420

8.3938

8.6540

8.9228

9.2004

9.4872

10.0890

8

8.8923

9.2142

9.5491

9.8975

10.2598

10.6366

11.0285

11.4359

12.2997

9

10.1591

10.5828

11.0266

11.4913

11.9780

12.4876

13.0210

13.5795

14.7757

10

11.4639

12.0061

12.5779

13.1808

13.8164

14.4866

15.1929

15.9374

17.5487

With deposits of $5,000 at the end of each year, you will have accumulated $38,578 at the end of the sixth year if the annual rate of interest is 10%. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.)

Answer: TRUE

Explanation: 7.7156 is the FV factor on the Future Value of an Annuity table; n = 6; i = 10%

Future Value of an Annuity = Annuity × FV Factor

Future Value of an Annuity = $5,000 × 7.7156 = $38,578

Difficulty: 3 Hard

Topic: Future Value of an Annuity

Learning Objective: B-P4 Apply future value concepts to an annuity by using interest tables.

Bloom's: Apply

AACSB: Analytical Thinking

AICPA: BB Industry; FN Decision Making

22) The future value of an ordinary annuity is the accumulated value of each annuity payment excluding interest as of the date of the final payment.

Answer: FALSE

Difficulty: 2 Medium

Topic: Future Value of an Annuity

Learning Objective: B-P4 Apply future value concepts to an annuity by using interest tables.

Bloom's: Understand

AACSB: Communication

AICPA: BB Industry; FN Decision Making

23) Interest may be defined as:

A) Time.

B) A borrower's payment to the owner of an asset for its use.

C) The future value of a present amount.

D) Always a liability.

E) Always an asset.

Answer: B

Difficulty: 1 Easy

Topic: Present and Future Value Concepts

Learning Objective: B-C1 Describe the earning of interest and the concepts of present and future values.

Bloom's: Remember

AACSB: Communication

AICPA: BB Industry; FN Decision Making

24) If we want to know the value of present-day assets at a future date, we can use:

A) Present value computations.

B) Annuity computations.

C) Interest computations.

D) Future value computations.

E) Earnings computations.

Answer: D

Difficulty: 2 Medium

Topic: Present and Future Value Concepts

Learning Objective: B-C1 Describe the earning of interest and the concepts of present and future values.

Bloom's: Understand

AACSB: Communication

AICPA: BB Industry; FN Decision Making

25) Which interest rate column would you use from a present value or future value table for 8% interest compounded quarterly?

A) 12%

B) 6%

C) 3%

D) 2%

E) 1%

Answer: D

Explanation: An 8% annual interest rate is divided by 4 to find the quarterly rate.

Difficulty: 2 Medium

Topic: Present Value of a Single Amount; Future Value of Single Amount

Learning Objective: B-P1 Apply present value concepts to a single amount by using interest tables.; B-P2 Apply future value concepts to a single amount by using interest tables.

Bloom's: Understand

AACSB: Communication

AICPA: BB Industry; FN Decision Making

26) Which column (i) and row (n) would you use from a present value or future value table for 8% interest compounded quarterly for 6 years?

A) (i) = 2%, (n) = 8

B) (i) = 8%, (n) = 6

C) (i) = 2%, (n) = 24

D) (i) = 4%, (n) = 12

E) (i) = 4%, (n) = 24

Answer: C

Explanation: (i) = 8% annual interest rate divided by 4 = 2% quarterly rate.

(n) = 6 years x 4 quarters per year = 24 quarterly periods.

Difficulty: 2 Medium

Topic: Present Value of a Single Amount; Future Value of Single Amount

Learning Objective: B-P1 Apply present value concepts to a single amount by using interest tables.; B-P2 Apply future value concepts to a single amount by using interest tables.

Bloom's: Understand

AACSB: Communication

AICPA: BB Industry; FN Decision Making

27) Present Value of 1

Periods

3%

4%

5%

6%

7%

8%

9%

10%

12%

3

0.9151

0.8890

0.8638

0.8396

0.8163

0.7938

0.7722

0.7513

0.7118

4

0.8885

0.8548

0.8227

0.7921

0.7629

0.7350

0.7084

0.6830

0.6355

5

0.8626

0.8219

0.7835

0.7473

0.7130

0.6806

0.6499

0.6209

0.5674

6

0.8375

0.7903

0.7462

0.7050

0.6663

0.6302

0.5963

0.5645

0.5066

7

0.8131

0.7599

0.7107

0.6651

0.6227

0.5835

0.5470

0.5132

0.4523

8

0.7894

0.7307

0.6768

0.6274

0.5820

0.5403

0.5019

0.4665

0.4039

9

0.7664

0.7026

0.6446

0.5919

0.5439

0.5002

0.4604

0.4241

0.3606

10

0.7441

0.6756

0.6139

0.5584

0.5083

0.4632

0.4224

0.3855

0.3220

Future Value of 1

Periods

3%

4%

5%

6%

7%

8%

9%

10%

12%

3

1.0927

1.1249

1.1576

1.1910

1.2250

1.2597

1.2950

1.3310

1.4049

4

1.1255

1.1699

1.2155

1.2625

1.3108

1.3605

1.4116

1.4641

1.5735

5

1.1593

1.2167

1.2763

1.3382

1.4026

1.4693

1.5386

1.6105

1.7623

6

1.1941

1.2653

1.3401

1.4185

1.5007

1.5869

1.6771

1.7716

1.9738

7

1.2299

1.3159

1.4071

1.5036

1.6058

1.7138

1.8280

1.9487

2.2107

8

1.2668

1.3686

1.4775

1.5938

1.7182

1.8509

1.9926

2.1436

2.4760

9

1.3048

1.4233

1.5513

1.6895

1.8385

1.9990

2.1719

2.3579

2.7731

10

1.3439

1.4802

1.6289

1.7908

1.9672

2.1589

2.3674

2.5937

3.1058

Present Value of an Annuity of 1

Periods

3%

4%

5%

6%

7%

8%

9%

10%

12%

3

2.8286

2.7751

2.7232

2.6730

2.6243

2.5771

2.5313

2.4869

2.4018

4

3.7171

3.6299

3.5460

3.4651

3.3872

3.3121

3.2397

3.1699

3.0373

5

4.5797

4.4518

4.3295

4.2124

4.1002

3.9927

3.8897

3.7908

3.6048

6

5.4172

5.2421

5.0757

4.9173

4.7665

4.6229

4.4859

4.3553

4.1114

7

6.2303

6.0021

5.7864

5.5824

5.3893

5.2064

5.0330

4.8684

4.5638

8

7.0197

6.7327

6.4632

6.2098

5.9713

5.7466

5.5348

5.3349

4.9676

9

7.7861

7.4353

7.1078

6.8017

6.5152

6.2469

5.9952

5.7950

5.3282

10

8.5302

8.1109

7.7217

7.3601

7.0236

6.7101

6.4177

6.1446

5.6502

A company is considering investing in a project that is expected to return $350,000 four years from now. How much is the company willing to pay for this investment if the company requires a 12% return? (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.)

A) $55,606

B) $137,681

C) $222,425

D) $265,764

E) $350,000

Answer: C

Explanation: The PV factor on the Present Value table when n = 4 and i = 12% is 0.6355

Present Value = Future Value × PV Factor

Present Value = $350,000 × 0.6355 = $222,425

Difficulty: 2 Medium

Topic: Present Value of a Single Amount

Learning Objective: B-P1 Apply present value concepts to a single amount by using interest tables.

Bloom's: Apply

AACSB: Analytical Thinking

AICPA: BB Industry; FN Decision Making

28) Present Value of 1

Periods

3%

4%

5%

6%

7%

8%

9%

10%

12%

3

0.9151

0.8890

0.8638

0.8396

0.8163

0.7938

0.7722

0.7513

0.7118

4

0.8885

0.8548

0.8227

0.7921

0.7629

0.7350

0.7084

0.6830

0.6355

5

0.8626

0.8219

0.7835

0.7473

0.7130

0.6806

0.6499

0.6209

0.5674

6

0.8375

0.7903

0.7462

0.7050

0.6663

0.6302

0.5963

0.5645

0.5066

7

0.8131

0.7599

0.7107

0.6651

0.6227

0.5835

0.5470

0.5132

0.4523

8

0.7894

0.7307

0.6768

0.6274

0.5820

0.5403

0.5019

0.4665

0.4039

9

0.7664

0.7026

0.6446

0.5919

0.5439

0.5002

0.4604

0.4241

0.3606

10

0.7441

0.6756

0.6139

0.5584

0.5083

0.4632

0.4224

0.3855

0.3220

Future Value of 1

Periods

3%

4%

5%

6%

7%

8%

9%

10%

12%

3

1.0927

1.1249

1.1576

1.1910

1.2250

1.2597

1.2950

1.3310

1.4049

4

1.1255

1.1699

1.2155

1.2625

1.3108

1.3605

1.4116

1.4641

1.5735

5

1.1593

1.2167

1.2763

1.3382

1.4026

1.4693

1.5386

1.6105

1.7623

6

1.1941

1.2653

1.3401

1.4185

1.5007

1.5869

1.6771

1.7716

1.9738

7

1.2299

1.3159

1.4071

1.5036

1.6058

1.7138

1.8280

1.9487

2.2107

8

1.2668

1.3686

1.4775

1.5938

1.7182

1.8509

1.9926

2.1436

2.4760

9

1.3048

1.4233

1.5513

1.6895

1.8385

1.9990

2.1719

2.3579

2.7731

10

1.3439

1.4802

1.6289

1.7908

1.9672

2.1589

2.3674

2.5937

3.1058

Present Value of an Annuity of 1

Periods

3%

4%

5%

6%

7%

8%

9%

10%

12%

3

2.8286

2.7751

2.7232

2.6730

2.6243

2.5771

2.5313

2.4869

2.4018

4

3.7171

3.6299

3.5460

3.4651

3.3872

3.3121

3.2397

3.1699

3.0373

5

4.5797

4.4518

4.3295

4.2124

4.1002

3.9927

3.8897

3.7908

3.6048

6

5.4172

5.2421

5.0757

4.9173

4.7665

4.6229

4.4859

4.3553

4.1114

7

6.2303

6.0021

5.7864

5.5824

5.3893

5.2064

5.0330

4.8684

4.5638

8

7.0197

6.7327

6.4632

6.2098

5.9713

5.7466

5.5348

5.3349

4.9676

9

7.7861

7.4353

7.1078

6.8017

6.5152

6.2469

5.9952

5.7950

5.3282

10

8.5302

8.1109

7.7217

7.3601

7.0236

6.7101

6.4177

6.1446

5.6502

Future Value of an Annuity of 1

Periods

3%

4%

5%

6%

7%

8%

9%

10%

12%

3

3.0909

3.1216

3.1525

3.1836

3.2149

3.2464

3.2781

3.3100

3.3744

4

4.1836

4.2465

4.3101

4.3746

4.4399

4.5061

4.5731

4.6410

4.7793

5

5.3091

5.4163

5.5256

5.6371

5.7507

5.8666

5.9847

6.1051

6.3528

6

6.4684

6.6330

6.8019

6.9753

7.1533

7.3359

7.5233

7.7156

8.1152

7

7.6625

7.8983

8.1420

8.3938

8.6540

8.9228

9.2004

9.4872

10.0890

8

8.8923

9.2142

9.5491

9.8975

10.2598

10.6366

11.0285

11.4359

12.2997

9

10.1591

10.5828

11.0266

11.4913

11.9780

12.4876

13.0210

13.5795

14.7757

10

11.4639

12.0061

12.5779

13.1808

13.8164

14.4866

15.1929

15.9374

17.5487

Hao made a single investment which, after 5 years invested at 12% compounded semiannually, has accumulated to $214,900. How much did Hao invest initially? (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.)

A) $214,896

B) $160,584

C) $211,476

D) $120,000

E) $ 21,486

Answer: D

Explanation: The PV factor on the Present Value table when n =10 and i = 6% is 0.5584

Present Value = Future Value × PV Factor

Present Value = $214,900 × 0.5584 = $120,000

Difficulty: 2 Medium

Topic: Present Value of a Single Amount

Learning Objective: B-P1 Apply present value concepts to a single amount by using interest tables.

Bloom's: Apply

AACSB: Analytical Thinking

AICPA: BB Industry; FN Decision Making

29) Present Value of 1

Periods

3%

4%

5%

6%

7%

8%

9%

10%

12%

3

0.9151

0.8890

0.8638

0.8396

0.8163

0.7938

0.7722

0.7513

0.7118

4

0.8885

0.8548

0.8227

0.7921

0.7629

0.7350

0.7084

0.6830

0.6355

5

0.8626

0.8219

0.7835

0.7473

0.7130

0.6806

0.6499

0.6209

0.5674

6

0.8375

0.7903

0.7462

0.7050

0.6663

0.6302

0.5963

0.5645

0.5066

7

0.8131

0.7599

0.7107

0.6651

0.6227

0.5835

0.5470

0.5132

0.4523

8

0.7894

0.7307

0.6768

0.6274

0.5820

0.5403

0.5019

0.4665

0.4039

9

0.7664

0.7026

0.6446

0.5919

0.5439

0.5002

0.4604

0.4241

0.3606

10

0.7441

0.6756

0.6139

0.5584

0.5083

0.4632

0.4224

0.3855

0.3220

Future Value of 1

Periods

3%

4%

5%

6%

7%

8%

9%

10%

12%

3

1.0927

1.1249

1.1576

1.1910

1.2250

1.2597

1.2950

1.3310

1.4049

4

1.1255

1.1699

1.2155

1.2625

1.3108

1.3605

1.4116

1.4641

1.5735

5

1.1593

1.2167

1.2763

1.3382

1.4026

1.4693

1.5386

1.6105

1.7623

6

1.1941

1.2653

1.3401

1.4185

1.5007

1.5869

1.6771

1.7716

1.9738

7

1.2299

1.3159

1.4071

1.5036

1.6058

1.7138

1.8280

1.9487

2.2107

8

1.2668

1.3686

1.4775

1.5938

1.7182

1.8509

1.9926

2.1436

2.4760

9

1.3048

1.4233

1.5513

1.6895

1.8385

1.9990

2.1719

2.3579

2.7731

10

1.3439

1.4802

1.6289

1.7908

1.9672

2.1589

2.3674

2.5937

3.1058

Present Value of an Annuity of 1

Periods

3%

4%

5%

6%

7%

8%

9%

10%

12%

3

2.8286

2.7751

2.7232

2.6730

2.6243

2.5771

2.5313

2.4869

2.4018

4

3.7171

3.6299

3.5460

3.4651

3.3872

3.3121

3.2397

3.1699

3.0373

5

4.5797

4.4518

4.3295

4.2124

4.1002

3.9927

3.8897

3.7908

3.6048

6

5.4172

5.2421

5.0757

4.9173

4.7665

4.6229

4.4859

4.3553

4.1114

7

6.2303

6.0021

5.7864

5.5824

5.3893

5.2064

5.0330

4.8684

4.5638

8

7.0197

6.7327

6.4632

6.2098

5.9713

5.7466

5.5348

5.3349

4.9676

9

7.7861

7.4353

7.1078

6.8017

6.5152

6.2469

5.9952

5.7950

5.3282

10

8.5302

8.1109

7.7217

7.3601

7.0236

6.7101

6.4177

6.1446

5.6502

Future Value of an Annuity of 1

Periods

3%

4%

5%

6%

7%

8%

9%

10%

12%

3

3.0909

3.1216

3.1525

3.1836

3.2149

3.2464

3.2781

3.3100

3.3744

4

4.1836

4.2465

4.3101

4.3746

4.4399

4.5061

4.5731

4.6410

4.7793

5

5.3091

5.4163

5.5256

5.6371

5.7507

5.8666

5.9847

6.1051

6.3528

6

6.4684

6.6330

6.8019

6.9753

7.1533

7.3359

7.5233

7.7156

8.1152

7

7.6625

7.8983

8.1420

8.3938

8.6540

8.9228

9.2004

9.4872

10.0890

8

8.8923

9.2142

9.5491

9.8975

10.2598

10.6366

11.0285

11.4359

12.2997

9

10.1591

10.5828

11.0266

11.4913

11.9780

12.4876

13.0210

13.5795

14.7757

10

11.4639

12.0061

12.5779

13.1808

13.8164

14.4866

15.1929

15.9374

17.5487

Molly borrows money by promising to make a single payment of $100,000 at the end of 5 years. How much money is Molly able to borrow if the interest rate is 10%, compounded semiannually? (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.)

A) $38,550

B) $78,350

C) $62,090

D) $74,850

E) $61,390

Answer: E

Explanation: The PV factor on the Present Value table when n =10 and i = 5% is 0.6139

Present Value = Future Value × PV Factor

Present Value = $100,000 × 0.6139 = $61,390

Difficulty: 2 Medium

Topic: Present Value of a Single Amount

Learning Objective: B-P1 Apply present value concepts to a single amount by using interest tables.

Bloom's: Apply

AACSB: Analytical Thinking

AICPA: BB Industry; FN Decision Making

30) Present Value of 1

Periods

3%

4%

5%

6%

7%

8%

9%

10%

12%

3

0.9151

0.8890

0.8638

0.8396

0.8163

0.7938

0.7722

0.7513

0.7118

4

0.8885

0.8548

0.8227

0.7921

0.7629

0.7350

0.7084

0.6830

0.6355

5

0.8626

0.8219

0.7835

0.7473

0.7130

0.6806

0.6499

0.6209

0.5674

6

0.8375

0.7903

0.7462

0.7050

0.6663

0.6302

0.5963

0.5645

0.5066

7

0.8131

0.7599

0.7107

0.6651

0.6227

0.5835

0.5470

0.5132

0.4523

8

0.7894

0.7307

0.6768

0.6274

0.5820

0.5403

0.5019

0.4665

0.4039

9

0.7664

0.7026

0.6446

0.5919

0.5439

0.5002

0.4604

0.4241

0.3606

10

0.7441

0.6756

0.6139

0.5584

0.5083

0.4632

0.4224

0.3855

0.3220

Future Value of 1

Periods

3%

4%

5%

6%

7%

8%

9%

10%

12%

3

1.0927

1.1249

1.1576

1.1910

1.2250

1.2597

1.2950

1.3310

1.4049

4

1.1255

1.1699

1.2155

1.2625

1.3108

1.3605

1.4116

1.4641

1.5735

5

1.1593

1.2167

1.2763

1.3382

1.4026

1.4693

1.5386

1.6105

1.7623

6

1.1941

1.2653

1.3401

1.4185

1.5007

1.5869

1.6771

1.7716

1.9738

7

1.2299

1.3159

1.4071

1.5036

1.6058

1.7138

1.8280

1.9487

2.2107

8

1.2668

1.3686

1.4775

1.5938

1.7182

1.8509

1.9926

2.1436

2.4760

9

1.3048

1.4233

1.5513

1.6895

1.8385

1.9990

2.1719

2.3579

2.7731

10

1.3439

1.4802

1.6289

1.7908

1.9672

2.1589

2.3674

2.5937

3.1058

Present Value of an Annuity of 1

Periods

3%

4%

5%

6%

7%

8%

9%

10%

12%

3

2.8286

2.7751

2.7232

2.6730

2.6243

2.5771

2.5313

2.4869

2.4018

4

3.7171

3.6299

3.5460

3.4651

3.3872

3.3121

3.2397

3.1699

3.0373

5

4.5797

4.4518

4.3295

4.2124

4.1002

3.9927

3.8897

3.7908

3.6048

6

5.4172

5.2421

5.0757

4.9173

4.7665

4.6229

4.4859

4.3553

4.1114

7

6.2303

6.0021

5.7864

5.5824

5.3893

5.2064

5.0330

4.8684

4.5638

8

7.0197

6.7327

6.4632

6.2098

5.9713

5.7466

5.5348

5.3349

4.9676

9

7.7861

7.4353

7.1078

6.8017

6.5152

6.2469

5.9952

5.7950

5.3282

10

8.5302

8.1109

7.7217

7.3601

7.0236

6.7101

6.4177

6.1446

5.6502

Future Value of an Annuity of 1

Periods

3%

4%

5%

6%

7%

8%

9%

10%

12%

3

3.0909

3.1216

3.1525

3.1836

3.2149

3.2464

3.2781

3.3100

3.3744

4

4.1836

4.2465

4.3101

4.3746

4.4399

4.5061

4.5731

4.6410

4.7793

5

5.3091

5.4163

5.5256

5.6371

5.7507

5.8666

5.9847

6.1051

6.3528

6

6.4684

6.6330

6.8019

6.9753

7.1533

7.3359

7.5233

7.7156

8.1152

7

7.6625

7.8983

8.1420

8.3938

8.6540

8.9228

9.2004

9.4872

10.0890

8

8.8923

9.2142

9.5491

9.8975

10.2598

10.6366

11.0285

11.4359

12.2997

9

10.1591

10.5828

11.0266

11.4913

11.9780

12.4876

13.0210

13.5795

14.7757

10

11.4639

12.0061

12.5779

13.1808

13.8164

14.4866

15.1929

15.9374

17.5487

Jason has a loan that requires a single payment of $4,000 at the end of 3 years. The loan's interest rate is 6%, compounded semiannually. How much did Jason borrow? (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.)

A) $3,358.40

B) $4,000.00

C) $3,660.40

D) $4,776.40

E) $3,350.00

Answer: E

Explanation: 3 years = 6 semiannual periods; 6% annual interest = 3% semiannually

The PV factor on the Present Value table when n = 6 and i = 3% is 0.8375

Present Value = Future Value × PV Factor

Present Value = $4,000 × 0.8375 = $3,350.00

Difficulty: 3 Hard

Topic: Present Value of a Single Amount

Learning Objective: B-P1 Apply present value concepts to a single amount by using interest tables.

Bloom's: Apply

AACSB: Analytical Thinking

AICPA: BB Industry; FN Decision Making

31) Present Value of 1

Periods

3%

4%

5%

6%

7%

8%

9%

10%

12%

3

0.9151

0.8890

0.8638

0.8396

0.8163

0.7938

0.7722

0.7513

0.7118

4

0.8885

0.8548

0.8227

0.7921

0.7629

0.7350

0.7084

0.6830

0.6355

5

0.8626

0.8219

0.7835

0.7473

0.7130

0.6806

0.6499

0.6209

0.5674

6

0.8375

0.7903

0.7462

0.7050

0.6663

0.6302

0.5963

0.5645

0.5066

7

0.8131

0.7599

0.7107

0.6651

0.6227

0.5835

0.5470

0.5132

0.4523

8

0.7894

0.7307

0.6768

0.6274

0.5820

0.5403

0.5019

0.4665

0.4039

9

0.7664

0.7026

0.6446

0.5919

0.5439

0.5002

0.4604

0.4241

0.3606

10

0.7441

0.6756

0.6139

0.5584

0.5083

0.4632

0.4224

0.3855

0.3220

Future Value of 1

Periods

3%

4%

5%

6%

7%

8%

9%

10%

12%

3

1.0927

1.1249

1.1576

1.1910

1.2250

1.2597

1.2950

1.3310

1.4049

4

1.1255

1.1699

1.2155

1.2625

1.3108

1.3605

1.4116

1.4641

1.5735

5

1.1593

1.2167

1.2763

1.3382

1.4026

1.4693

1.5386

1.6105

1.7623

6

1.1941

1.2653

1.3401

1.4185

1.5007

1.5869

1.6771

1.7716

1.9738

7

1.2299

1.3159

1.4071

1.5036

1.6058

1.7138

1.8280

1.9487

2.2107

8

1.2668

1.3686

1.4775

1.5938

1.7182

1.8509

1.9926

2.1436

2.4760

9

1.3048

1.4233

1.5513

1.6895

1.8385

1.9990

2.1719

2.3579

2.7731

10

1.3439

1.4802

1.6289

1.7908

1.9672

2.1589

2.3674

2.5937

3.1058

Present Value of an Annuity of 1

Periods

3%

4%

5%

6%

7%

8%

9%

10%

12%

3

2.8286

2.7751

2.7232

2.6730

2.6243

2.5771

2.5313

2.4869

2.4018

4

3.7171

3.6299

3.5460

3.4651

3.3872

3.3121

3.2397

3.1699

3.0373

5

4.5797

4.4518

4.3295

4.2124

4.1002

3.9927

3.8897

3.7908

3.6048

6

5.4172

5.2421

5.0757

4.9173

4.7665

4.6229

4.4859

4.3553

4.1114

7

6.2303

6.0021

5.7864

5.5824

5.3893

5.2064

5.0330

4.8684

4.5638

8

7.0197

6.7327

6.4632

6.2098

5.9713

5.7466

5.5348

5.3349

4.9676

9

7.7861

7.4353

7.1078

6.8017

6.5152

6.2469

5.9952

5.7950

5.3282

10

8.5302

8.1109

7.7217

7.3601

7.0236

6.7101

6.4177

6.1446

5.6502

C) $6,000

D) $8,836

E) $8,306

Answer: A

Explanation: The PV factor on the Present Value table when n = 6 and i = 6% is 0.7050

Present Value = Future Value × PV Factor

Present Value = $10,000 × 0.7050 = $7,050.00

Difficulty: 2 Medium

Topic: Present Value of a Single Amount

Learning Objective: B-P1 Apply present value concepts to a single amount by using interest tables.

Bloom's: Apply

AACSB: Analytical Thinking

AICPA: BB Industry; FN Decision Making

32) Present Value of 1

Periods

3%

4%

5%

6%

7%

8%

9%

10%

12%

3

0.9151

0.8890

0.8638

0.8396

0.8163

0.7938

0.7722

0.7513

0.7118

4

0.8885

0.8548

0.8227

0.7921

0.7629

0.7350

0.7084

0.6830

0.6355

5

0.8626

0.8219

0.7835

0.7473

0.7130

0.6806

0.6499

0.6209

0.5674

6

0.8375

0.7903

0.7462

0.7050

0.6663

0.6302

0.5963

0.5645

0.5066

7

0.8131

0.7599

0.7107

0.6651

0.6227

0.5835

0.5470

0.5132

0.4523

8

0.7894

0.7307

0.6768

0.6274

0.5820

0.5403

0.5019

0.4665

0.4039

9

0.7664

0.7026

0.6446

0.5919

0.5439

0.5002

0.4604

0.4241

0.3606

10

0.7441

0.6756

0.6139

0.5584

0.5083

0.4632

0.4224

0.3855

0.3220

Future Value of 1

Periods

3%

4%

5%

6%

7%

8%

9%

10%

12%

3

1.0927

1.1249

1.1576

1.1910

1.2250

1.2597

1.2950

1.3310

1.4049

4

1.1255

1.1699

1.2155

1.2625

1.3108

1.3605

1.4116

1.4641

1.5735

5

1.1593

1.2167

1.2763

1.3382

1.4026

1.4693

1.5386

1.6105

1.7623

6

1.1941

1.2653

1.3401

1.4185

1.5007

1.5869

1.6771

1.7716

1.9738

7

1.2299

1.3159

1.4071

1.5036

1.6058

1.7138

1.8280

1.9487

2.2107

8

1.2668

1.3686

1.4775

1.5938

1.7182

1.8509

1.9926

2.1436

2.4760

9

1.3048

1.4233

1.5513

1.6895

1.8385

1.9990

2.1719

2.3579

2.7731

10

1.3439

1.4802

1.6289

1.7908

1.9672

2.1589

2.3674

2.5937

3.1058

Present Value of an Annuity of 1

Periods

3%

4%

5%

6%

7%

8%

9%

10%

12%

3

2.8286

2.7751

2.7232

2.6730

2.6243

2.5771

2.5313

2.4869

2.4018

4

3.7171

3.6299

3.5460

3.4651

3.3872

3.3121

3.2397

3.1699

3.0373

5

4.5797

4.4518

4.3295

4.2124

4.1002

3.9927

3.8897

3.7908

3.6048

6

5.4172

5.2421

5.0757

4.9173

4.7665

4.6229

4.4859

4.3553

4.1114

7

6.2303

6.0021

5.7864

5.5824

5.3893

5.2064

5.0330

4.8684

4.5638

8

7.0197

6.7327

6.4632

6.2098

5.9713

5.7466

5.5348

5.3349

4.9676

9

7.7861

7.4353

7.1078

6.8017

6.5152

6.2469

5.9952

5.7950

5.3282

10

8.5302

8.1109

7.7217

7.3601

7.0236

6.7101

6.4177

6.1446

5.6502

Future Value of an Annuity of 1

Periods

3%

4%

5%

6%

7%

8%

9%

10%

12%

3

3.0909

3.1216

3.1525

3.1836

3.2149

3.2464

3.2781

3.3100

3.3744

4

4.1836

4.2465

4.3101

4.3746

4.4399

4.5061

4.5731

4.6410

4.7793

5

5.3091

5.4163

5.5256

5.6371

5.7507

5.8666

5.9847

6.1051

6.3528

6

6.4684

6.6330

6.8019

6.9753

7.1533

7.3359

7.5233

7.7156

8.1152

7

7.6625

7.8983

8.1420

8.3938

8.6540

8.9228

9.2004

9.4872

10.0890

8

8.8923

9.2142

9.5491

9.8975

10.2598

10.6366

11.0285

11.4359

12.2997

9

10.1591

10.5828

11.0266

11.4913

11.9780

12.4876

13.0210

13.5795

14.7757

10

11.4639

12.0061

12.5779

13.1808

13.8164

14.4866

15.1929

15.9374

17.5487

Paul wants to invest a sum of money today that will accumulate to $50,000 at the end of 4 years. Assuming he can earn an interest rate of 8% compounded semiannually, how much must he invest today? (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.)

A) $36,535

B) $27,015

C) $42,740

D) $36,750

E) $31,414

Answer: A

Explanation: The PV factor on the Present Value table when n = 8 and i = 4% is 0.7307

Present Value = Future Value × PV Factor

Present Value = $50,000 × 0.7307 = $36,535.

Difficulty: 2 Medium

Topic: Present Value of a Single Amount

Learning Objective: B-P1 Apply present value concepts to a single amount by using interest tables.

Bloom's: Apply

AACSB: Analytical Thinking

AICPA: BB Industry; FN Decision Making

33) Present Value of 1

Periods

3%

4%

5%

6%

7%

8%

9%

10%

12%

3

0.9151

0.8890

0.8638

0.8396

0.8163

0.7938

0.7722

0.7513

0.7118

4

0.8885

0.8548

0.8227

0.7921

0.7629

0.7350

0.7084

0.6830

0.6355

5

0.8626

0.8219

0.7835

0.7473

0.7130

0.6806

0.6499

0.6209

0.5674

6

0.8375

0.7903

0.7462

0.7050

0.6663

0.6302

0.5963

0.5645

0.5066

7

0.8131

0.7599

0.7107

0.6651

0.6227

0.5835

0.5470

0.5132

0.4523

8

0.7894

0.7307

0.6768

0.6274

0.5820

0.5403

0.5019

0.4665

0.4039

9

0.7664

0.7026

0.6446

0.5919

0.5439

0.5002

0.4604

0.4241

0.3606

10

0.7441

0.6756

0.6139

0.5584

0.5083

0.4632

0.4224

0.3855

0.3220

Future Value of 1

Periods

3%

4%

5%

6%

7%

8%

9%

10%

12%

3

1.0927

1.1249

1.1576

1.1910

1.2250

1.2597

1.2950

1.3310

1.4049

4

1.1255

1.1699

1.2155

1.2625

1.3108

1.3605

1.4116

1.4641

1.5735

5

1.1593

1.2167

1.2763

1.3382

1.4026

1.4693

1.5386

1.6105

1.7623

6

1.1941

1.2653

1.3401

1.4185

1.5007

1.5869

1.6771

1.7716

1.9738

7

1.2299

1.3159

1.4071

1.5036

1.6058

1.7138

1.8280

1.9487

2.2107

8

1.2668

1.3686

1.4775

1.5938

1.7182

1.8509

1.9926

2.1436

2.4760

9

1.3048

1.4233

1.5513

1.6895

1.8385

1.9990

2.1719

2.3579

2.7731

10

1.3439

1.4802

1.6289

1.7908

1.9672

2.1589

2.3674

2.5937

3.1058

Present Value of an Annuity of 1

Periods

3%

4%

5%

6%

7%

8%

9%

10%

12%

3

2.8286

2.7751

2.7232

2.6730

2.6243

2.5771

2.5313

2.4869

2.4018

4

3.7171

3.6299

3.5460

3.4651

3.3872

3.3121

3.2397

3.1699

3.0373

5

4.5797

4.4518

4.3295

4.2124

4.1002

3.9927

3.8897

3.7908

3.6048

6

5.4172

5.2421

5.0757

4.9173

4.7665

4.6229

4.4859

4.3553

4.1114

7

6.2303

6.0021

5.7864

5.5824

5.3893

5.2064

5.0330

4.8684

4.5638

8

7.0197

6.7327

6.4632

6.2098

5.9713

5.7466

5.5348

5.3349

4.9676

9

7.7861

7.4353

7.1078

6.8017

6.5152

6.2469

5.9952

5.7950

5.3282

10

8.5302

8.1109

7.7217

7.3601

7.0236

6.7101

6.4177

6.1446

5.6502

Future Value of an Annuity of 1

Periods

3%

4%

5%

6%

7%

8%

9%

10%

12%

3

3.0909

3.1216

3.1525

3.1836

3.2149

3.2464

3.2781

3.3100

3.3744

4

4.1836

4.2465

4.3101

4.3746

4.4399

4.5061

4.5731

4.6410

4.7793

5

5.3091

5.4163

5.5256

5.6371

5.7507

5.8666

5.9847

6.1051

6.3528

6

6.4684

6.6330

6.8019

6.9753

7.1533

7.3359

7.5233

7.7156

8.1152

7

7.6625

7.8983

8.1420

8.3938

8.6540

8.9228

9.2004

9.4872

10.0890

8

8.8923

9.2142

9.5491

9.8975

10.2598

10.6366

11.0285

11.4359

12.2997

9

10.1591

10.5828

11.0266

11.4913

11.9780

12.4876

13.0210

13.5795

14.7757

10

11.4639

12.0061

12.5779

13.1808

13.8164

14.4866

15.1929

15.9374

17.5487

Marshall has received an inheritance and wants to invest a sum of money today that will yield $5,000 at the end of each of the next 10 years. Assuming he can earn an interest rate of 5% compounded annually, how much of his inheritance must he invest today? (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.)

A) $50,000.00

B) $47,500.00

C) $45,125.00

D) $38,608.50

E) $100,000.00

Answer: D

Explanation: The PV factor on the Present Value of an Annuity table when n = 10 and i = 5% is 7.7217

Present Value = Future Annuity Value × PV Factor

Present Value = $5,000 × 7.7217 = $38,608.50

Difficulty: 2 Medium

Topic: Present Value of an Annuity

Learning Objective: B-P3 Apply present value concepts to an annuity by using interest tables.

Bloom's: Apply

AACSB: Analytical Thinking

AICPA: BB Industry; FN Decision Making

34) Present Value of 1

Periods

3%

4%

5%

6%

7%

8%

9%

10%

12%

3

0.9151

0.8890

0.8638

0.8396

0.8163

0.7938

0.7722

0.7513

0.7118

4

0.8885

0.8548

0.8227

0.7921

0.7629

0.7350

0.7084

0.6830

0.6355

5

0.8626

0.8219

0.7835

0.7473

0.7130

0.6806

0.6499

0.6209

0.5674

6

0.8375

0.7903

0.7462

0.7050

0.6663

0.6302

0.5963

0.5645

0.5066

7

0.8131

0.7599

0.7107

0.6651

0.6227

0.5835

0.5470

0.5132

0.4523

8

0.7894

0.7307

0.6768

0.6274

0.5820

0.5403

0.5019

0.4665

0.4039

9

0.7664

0.7026

0.6446

0.5919

0.5439

0.5002

0.4604

0.4241

0.3606

10

0.7441

0.6756

0.6139

0.5584

0.5083

0.4632

0.4224

0.3855

0.3220

Future Value of 1

Periods

3%

4%

5%

6%

7%

8%

9%

10%

12%

3

1.0927

1.1249

1.1576

1.1910

1.2250

1.2597

1.2950

1.3310

1.4049

4

1.1255

1.1699

1.2155

1.2625

1.3108

1.3605

1.4116

1.4641

1.5735

5

1.1593

1.2167

1.2763

1.3382

1.4026

1.4693

1.5386

1.6105

1.7623

6

1.1941

1.2653

1.3401

1.4185

1.5007

1.5869

1.6771

1.7716

1.9738

7

1.2299

1.3159

1.4071

1.5036

1.6058

1.7138

1.8280

1.9487

2.2107

8

1.2668

1.3686

1.4775

1.5938

1.7182

1.8509

1.9926

2.1436

2.4760

9

1.3048

1.4233

1.5513

1.6895

1.8385

1.9990

2.1719

2.3579

2.7731

10

1.3439

1.4802

1.6289

1.7908

1.9672

2.1589

2.3674

2.5937

3.1058

Present Value of an Annuity of 1

Periods

3%

4%

5%

6%

7%

8%

9%

10%

12%

3

2.8286

2.7751

2.7232

2.6730

2.6243

2.5771

2.5313

2.4869

2.4018

4

3.7171

3.6299

3.5460

3.4651

3.3872

3.3121

3.2397

3.1699

3.0373

5

4.5797

4.4518

4.3295

4.2124

4.1002

3.9927

3.8897

3.7908

3.6048

6

5.4172

5.2421

5.0757

4.9173

4.7665

4.6229

4.4859

4.3553

4.1114

7

6.2303

6.0021

5.7864

5.5824

5.3893

5.2064

5.0330

4.8684

4.5638

8

7.0197

6.7327

6.4632

6.2098

5.9713

5.7466

5.5348

5.3349

4.9676

9

7.7861

7.4353

7.1078

6.8017

6.5152

6.2469

5.9952

5.7950

5.3282

10

8.5302

8.1109

7.7217

7.3601

7.0236

6.7101

6.4177

6.1446

5.6502

Future Value of an Annuity of 1

Periods

3%

4%

5%

6%

7%

8%

9%

10%

12%

3

3.0909

3.1216

3.1525

3.1836

3.2149

3.2464

3.2781

3.3100

3.3744

4

4.1836

4.2465

4.3101

4.3746

4.4399

4.5061

4.5731

4.6410

4.7793

5

5.3091

5.4163

5.5256

5.6371

5.7507

5.8666

5.9847

6.1051

6.3528

6

6.4684

6.6330

6.8019

6.9753

7.1533

7.3359

7.5233

7.7156

8.1152

7

7.6625

7.8983

8.1420

8.3938

8.6540

8.9228

9.2004

9.4872

10.0890

8

8.8923

9.2142

9.5491

9.8975

10.2598

10.6366

11.0285

11.4359

12.2997

9

10.1591

10.5828

11.0266

11.4913

11.9780

12.4876

13.0210

13.5795

14.7757

10

11.4639

12.0061

12.5779

13.1808

13.8164

14.4866

15.1929

15.9374

17.5487

Cody invests $1,800 per year from his summer wages at a 4% annual interest rate. He plans to take a European vacation at the end of 4 years when he graduates from college. How much will he have available to spend on his vacation? (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.)

A) $7,787.52

B) $7,488.00

C) $6,912.00

D) $7,200.00

E) $7,643.70

+
-
Only 0 units of this product remain

You might also be interested in