Online Exam

Author:

January 5th, 2018

Part 1 of 2 – Lesson 4 Questions 50.0/ 50.0 Points

Question 1 of 40
2.5/ 2.5 Points
Present value calculations do which of the following?
A. Compound all
future cash flows into the future
B. Compound all
future cash flows back to the present
C. Discount all
future cash flows back to the present
D. Discount all
future cash flows into the future

Question 2 of 40
2.5/ 2.5 Points
Your employer has agreed to place year-end deposits of
$1,000, $2,000, and $3,000 into your retirement account. The $1,000 deposit
will be one year from today, the $2,000 deposit two years from today, and the
$3,000 deposit three years from today. If your account earns 5% per year, how
much money will you have in the account at the end of Year 3 when the last
deposit is made?
A. $5,357.95
B. $6,000
C. $6,202.50
D. $6,727.88

Question 3 of 40
2.5/ 2.5 Points
The furniture store offers you no-money-down on a new set of
living room furniture. Further, you may pay for the furniture in three equal
annual end-of-the-year payments of $1,000 each with the first payment to be
made one year from today. If the discount rate is 6%, what is the present value
of the furniture payments?
A. $3,183.60
B. $3,000
C. $2,833.39
D. $2,673.01

Question 4 of 40
2.5/ 2.5 Points
If you borrow $100,000 at an annual rate of 8% for a 10-year
period and repay the interest of $8,000 at the end of each year prior to
maturity and the final payment of $108,000 at the end of 10 years, then you
have just repaid what type of loan?
A. Amortized loan
B. Interest-only
loan
C. Discount loan
D. Compound loan

Question 5 of 40
2.5/ 2.5 Points
When you pay off the principal and all of the interest at
one time at the maturity date of the loan, we call this type of loan a(n):
A. amortized loan.
B. interest-only
loan.
C. discount loan.
D. compound loan.

Question 6 of 40
2.5/ 2.5 Points
You currently have $67,000 in an interest-earning account.
From this account, you wish to make 20 year-end payments of $5,000 each. What
annual rate of return must you make on this account to meet your objective?
A. 4.16%
B. 5.03%
C. 6.42%
D. 7.32%

Question 7 of 40
2.5/ 2.5 Points
If you borrow $100,000 at an annual rate of 8% for a 10-year
period and repay with 10 equal annual end-of-the-year payments of $14,902.95,
then you have just repaid what type of loan?
A. Amortized loan
B. Interest-only
loan
C. Discount loan
D. Compound loan

Question 8 of 40
2.5/ 2.5 Points
You have saved $47,000 for college and wish to use $15,000
per year. If you use the money as an ordinary annuity and earn 6.15% on your
investment, how many years will your annuity last? Use a calculator to
determine your answer.
A. 4.27 years
B. 3.13 years
C. 3.59 years
D. 3.36 years

Question 9 of 40
2.5/ 2.5 Points
What is the present value of a stream of annual
end-of-the-year annuity cash flows if the discount rate is 0%, and the cash
flows of $50 last for 20 years?
A. Less than $1,000
B. Exactly $1,000
C. More than $1,000
D. This question
cannot be answered because we have an interest rate of 0%.

Question 10 of 40
2.5/ 2.5 Points
If you borrow $50,000 at an annual interest rate of 12% for
six years, what is the annual payment (prior to maturity) on an interest-only
type of loan?
A. $0
B. $6,000
C. $8,333.33
D. $12,161.29

Question 11 of 40
2.5/ 2.5 Points
Your parents have an investment portfolio of $400,000, and
they wish to take out cash flows of $50,000 per year as an ordinary annuity.
How long will their portfolio last if the portfolio is invested at an annual
rate of 4.50%? Use a calculator to determine your answer.
A. 8 years
B. 9.10 years
C. 9.60 years
D. 10.14 years

Question 12 of 40
2.5/ 2.5 Points
A/An __________ is a series of equal end-of-the-period cash
flows.
A. annuity
B. annuity due
C. perpetuity due
D. None of the above

Question 13 of 40
2.5/ 2.5 Points
What is the future value in Year 25 of an ordinary annuity
cash flow of $2,000 per year at an interest rate of 10% per year?
A. $66,505.81
B. $55,000.00
C. $196,694.12
D. $216,363.53

Question 14 of 40
2.5/ 2.5 Points
Which is greater, the present value of a $1,000 five-year
ordinary annuity discounted at 10%, or the present value of a $1,000 five-year
annuity due discounted at 10%?
A. The ordinary
annuity is worth more with a present value of $3,790.79.
B. The annuity due
is worth more with a present value of $4,169.87.
C. The ordinary
annuity is worth more with a present value of $4,169.87.
D. The annuity due
is worth more with a present value of $4,586.85.

Question 15 of 40
2.5/ 2.5 Points
You just won the Publisher’s Clearing House Sweepstakes and
the right to 20 after-tax ordinary annuity cash flows of $163,291.18. Assuming
a discount rate of 7.50%, what is the present value of your lottery winnings?
Use a calculator to determine your answer.
A. $3,265,823.60
B. $1,789,520.81
C. $1,664,670.52
D. There is not
enough information to answer this question.

Question 16 of 40
2.5/ 2.5 Points
What is the present value of a lottery paid as an annuity
due for 20 years if the cash flows are $250,000 per year and the appropriate
discount rate is 7.50%?
A. $5,000,000.00
B. $3,186,045.39
C. $2,739,769.55
D. $2,548,622.84

Question 17 of 40
2.5/ 2.5 Points
The main variables of the TVM equation are:
A. present value,
future value, time, interest rate, and payment.
B. present value, future
value, perpetuity, interest rate, and payment.
C. present value,
future value, time, annuity, and interest rate.
D. present value,
future value, perpetuity, interest rate, and principal.

Question 18 of 40
2.5/ 2.5 Points
Randy W. recently won the Western States Lottery of
$6,500,000. The lottery pays either a total of twenty $325,000 payments per
year with the first payment today (i.e., an annuity due), or $3,500,000 today.
At what interest rate would Randy be financially indifferent between these two
payout choices?
A. 5.37%
B. 7.36%
C. 7.76%
D. 8.00%

Question 19 of 40
2.5/ 2.5 Points
Your company just sold a product with the following payment
plan: $50,000 today, $25,000 next year, and $10,000 the following year. If your
firm places the payments into an account earning 10% per year, how much money
will be in the account after collecting the last payment?
A. $99,000
B. $98,000
C. $88,500
D. $85,000

Question 20 of 40
2.5/ 2.5 Points
Your firm intends to finance the purchase of a new
construction crane. The cost is $1,500,000. What is the size of the first
payment if the crane is financed with an interest-only loan at an annual rate
of 8.50%?
A. $228,611.56
B. $127,500
C. $3,391,475.16
D. There is not
enough information to answer this question.

Part 2 of 2 – Lesson 5 Questions 50.0/ 50.0 Points

Question 21 of 40
2.5/ 2.5 Points
If you take out a loan from a bank, you will be charged:
A. for principal but
not interest.
B. for interest but
not principal.
C. for both
principal and interest.
D. for interest
only.

Question 22 of 40
2.5/ 2.5 Points
Assume that you are willing to postpone consumption today
and buy a certificate of deposit (CD) at your local bank. Your reward for
postponing consumption implies that at the end of the year:
A. you will be able
to consume fewer goods.
B. you will be able
to buy the same amount of goods or services.
C. you will be able
to buy fewer goods or services.
D. you will be able
to buy more goods or services.

Question 23 of 40
2.5/ 2.5 Points
Assume that Don is 45 years old and has 20 years for saving
until he retires. He expects an APR of 8.5% on his investments. How much does
he need to save if he puts money away annually in equal end-of-the-year amounts
to achieve a future value of $1 million in 20 years’ time?
A. $20,570.00
B. $20,670.97
C. $20,770.90
D. $20,800.00

Question 24 of 40
2.5/ 2.5 Points
Nominal interest rates are the sum of two major components.
These components are:
A. the real interest
rate and expected inflation.
B. the risk-free
rate and expected inflation.
C. the real interest
rate and default premium.
D. the real interest
rate and the T-bill rate.

Question 25 of 40
2.5/ 2.5 Points
Suppose that over the life of the loan, the total interest
expense for a
monthly loan is $17,000, while the total interest payment
for an annual
loan is $19,000. Which of the below statements is FALSE?
A. The difference
reflects the reduction of the principal each month versus
the annual reduction of the principal.
B. The more frequent
the payment, the lower the total interest expense over
the life of the loan, even though the effective rate of the
loan is higher.
C. Reducing
principal at a slower pace reduces the overall interest paid on
a loan.
D. Reducing
principal at a slower pace increases the overall interest paid
on a loan.

Question 26 of 40
2.5/ 2.5 Points
What is the EAR if the APR is 5% and compounding is
quarterly?
A. Slightly above
5.09%
B. Slightly below
5.09%
C. Under 5%
D. Over 5.25%

Question 27 of 40
2.5/ 2.5 Points
The phrase “price to rent money” is sometimes used
to refer to:
A. historical
prices.
B. compound rates.
C. discount rates.
D. interest rates.

Question 28 of 40
2.5/ 2.5 Points
Which of the following statements is true?
A. By DECREASING the
number of payments per year, you REDUCE your total cash outflow but INCREASE
your effective borrowing rate.
B. By INCREASING the
number of payments per year, you BOOST your total cash outflow but INCREASE
your effective borrowing rate.
C. By INCREASING the
number of payments per year, you REDUCE your total cash outflow but INCREASE
your effective borrowing rate.
D. By INCREASING the
number of payments per year, you REDUCE your total cash outflow but DECREASE
your effective borrowing rate.

Question 29 of 40
2.5/ 2.5 Points
The number of periods for a consumer loan (n) is equal to
the:
A. number of years
times compounding periods per year.
B. number of years.
C. number of years
in a period.
D. number of
compounding periods.

Question 30 of 40
2.5/ 2.5 Points
The frequency of default on a home loan is __________ the
frequency of default on a credit card.
A. much lower than
B. much higher than
C. a bit lower than
D. a bit higher than

Question 31 of 40
2.5/ 2.5 Points
We can write the true relationship between the nominal
interest rate and the real rate and expected inflation as which of the
following?
A. (1 + r) = (1 + r)
× (1 + h*)
B. r = (1 + r*) × (1
+ h) – 1
C. r* = (1 + r) × (1
+ h) -1
D. r = (1 + r*) × (1
+ h) + 1

Question 32 of 40
2.5/ 2.5 Points
Which of the following statements is true if you increase
your monthly payment above the required loan payment?
A. The extra portion
of the payment does not go to the principal.
B. You can
significantly increase the number of payments needed to pay off the loan.
C. The extra portion
of the payment increases the principal.
D. You can
significantly reduce the number of payments needed to pay off the loan.

Question 33 of 40
2.5/ 2.5 Points
The real rate is 2.5% and inflation is 3.25%. What is the
approximate nominal rate?
A. 5.75%
B. 5.25%
C. 3.25%
D. 1.25%

Question 34 of 40
2.5/ 2.5 Points
What is the EAR if the APR is 10.52% and compounding is
daily?
A. Slightly above
10.09%
B. Slightly below
11.09%
C. Slightly above
11.09%
D. Over 11.25%

Question 35 of 40
2.5/ 2.5 Points
Suppose you postpone consumption so that by investing at 8%
you will have an extra $800 to spend in one year. Suppose that inflation is 4%
during this time. What is the approximate real increase in your purchasing
power?
A. $800
B. $600
C. $400
D. $200

Question 36 of 40
2.5/ 2.5 Points
You put down 20% on a home with a purchase price of
$300,000. The down payment is thus $60,000, leaving a balance owed of $240,000.
The bank will loan you the remaining balance at 4.28% APR. You will make annual
payments with a 20-year payment schedule. What is the annual annuity payment
under this schedule?
A. $18,100.23
B. $22,625.29
C. $12,000.00
D. $33,785.23

Question 37 of 40
2.5/ 2.5 Points
Which of the following statements is true?
A. On many
calculators the TVM key for interest is I/Y; this is Interest per Year, or the
EAR rate.
B. On many
calculators the TVM key for interest is Y/I; this is Interest per Year, or the
APR rate.
C. On many
calculators the TVM key for interest is I/Y; this is Interest per Year, or the
APR rate.
D. On many
calculators the TVM key for a period is I/Y.

Question 38 of 40
2.5/ 2.5 Points
When interest rates are stated or given for loan repayments,
it is assumed that they are __________ unless specifically stated otherwise.
A. daily rates
B. annual percentage
rates
C. effective annual
rates
D. APYs

Question 39 of 40
2.5/ 2.5 Points
The __________ compensates the investor for the additional
risk that the loan will not be repaid in full.
A. default premium
B. inflation premium

C. real rate
D. interest rate

Question 40 of 40
2.5/ 2.5 Points
Suppose you deposit money in a certificate of deposit (CD)
at a bank. Which of the following statements is true?
A. The bank is
borrowing money from you without a promise to repay that money with interest.
B. The bank is
lending money to you with a promise to repay that money with interest.
C. The bank is
technically renting money from you with a promise to repay that money with
interest.
D. The bank is
lending money to you, but not borrowing money from you.

Calculate the price

Make an order in advance and get the best price

Type of paper

Academic level

Deadline

Pages (550 words)

$0.00

*Price with a welcome 15% discount applied.

Pro tip: If you want to save more money and pay the lowest price, you need to set a more extended deadline.

We know how difficult it is to be a student these days. That's why our prices are one of the most affordable on the market, and there are no hidden fees.

Instead, we offer bonuses, discounts, and free services to make your experience outstanding.

How it works

Receive a 100% original paper that will pass Turnitin from a top essay writing service

step 1

Upload your instructions

Fill out the order form and provide paper details. You can even attach screenshots or add additional instructions later. If something is not clear or missing, the writer will contact you for clarification.

step 2

Control the process

Once you place an order with our professional essay writing services, we will email you login details to your account. There, you'll communicate with the writer and support team and track the writer's progress.

step 3

Download your paper on time

As soon as your work is ready, we’ll notify you via email. You'll then be able to download it from your account and request a revision if needed. Please note that you can also rate the writer's work in your account.

Pro service tips

How to get the most out of your experience with Essay Fountain

One writer throughout the entire course

If you like the writer, you can hire them again. Just copy & paste their ID on the order form ("Preferred Writer's ID" field). This way, your vocabulary will be uniform, and the writer will be aware of your needs.

The same paper from different writers

You can order essay or any other work from two different writers to choose the best one or give another version to a friend. This can be done through the add-on "Same paper from another writer."

Copy of sources used by the writer

Our college essay writers work with ScienceDirect and other databases. They can send you articles or materials used in PDF or through screenshots. Just tick the "Copy of sources" field on the order form.

Testimonials

See why 20k+ students have chosen us as their sole writing assistance provider

Check out the latest reviews and opinions submitted by real customers worldwide and make an informed decision.

Psychology

Paper was received before time which I was quite please with.

Customer 453101, June 18th, 2022

Ethics

Since I will be needing assistance from your Team, please do not block me from editing the paper. The entire did an awesome job on last semester and I never once encountered a situation as such. Thank you for your assistance and I look forward to working with the Team for the next 7 weeks of the semester.

Customer 452919, January 15th, 2022

Other

Should have been around social worker in the UK but I can adapt it.

Customer 453101, August 5th, 2022

Ethics

I Thank the entire team.

Customer 452919, January 25th, 2022

Sociology

Thank you for answering all of the questions provided. The last 3 discussions, I only received a grade of 14 out of 20 points. Let's see how it goes after the grades are posted next week.

Customer 452919, February 9th, 2023

Business Studies

This is fantastic! Thank you so much for your hard work!

Customer 453131, November 16th, 2022

Social Work and Human Services

According to the "Editor" the discussion received an 80%

Customer 452919, January 16th, 2026

Sociology

Thank you, I have been averaging 16/20 points for the past discussions 1-4). Unsure why, but I will know how this one goes in a few days. Thank you for your assistance.

Customer 452919, February 16th, 2023

Humanities

Always excellent service, appreciate all the hard work

Customer 452995, January 20th, 2022

Social Work and Human Services

Thank you for your assistance.

Customer 452919, October 10th, 2025

Health Care

Thank you for getting this paper done in a timely manner

Customer 452641, February 20th, 2021

Business Studies

The writer delivered as on time with quality work. But writteres communication could of been better and I would have been more content with choosing my own writer as per my assignment.

Customer 452679, March 24th, 2021

11,595

Customer reviews in total

96%

Current satisfaction rate

3 pages

Average paper length

37%

Customers referred by a friend

OUR GIFT TO YOU

15% OFF your first order

Use a coupon FIRST15 and enjoy expert help with any task at the most affordable price.

Claim my 15% OFF Order in Chat