🎯PV and FV of an Annuity: 20 MCQs

Tamara wants to buy a new van by paying monthly installments at the beginning of each month. The cost of the van is $10,000. If she wishes to find the amount of the monthly installment at 12% interest rate on the unpaid balance, she should use a table for the—————————.

Given below are excerpts from tables of time value for the 8% rate?

Interest factors in the fifth column are for:————————————————

TBS Company bought a five-year certificate of deposit for its land fund in the amount of $250,000. Calculate the maturity value of the CD at the end of its period if the interest rate is 9% compounded annually.

Use the Present and future value tables of $1 at 9% are presented below.

Present and future value tables of $1 at 3% are presented below:

Camilla wants to get $110,000 after five years. She decided to invest her money in a CD at a rate of 6% compounded semiannually.

What is the amount that Camilla should deposit to get the amount she wants?

Present and future value tables of $1 at 3% are presented below:

Bill is planning to give Melania a $500,000 gift 7 years from today. If money is worth 6% compounded semiannually, what is Melania’s gift worth today?

Present and future value tables of $1 at 3% are presented below:

A newly purchased machine is expected to generate the following cash flows:

Calculate the value of these cash flows today, if the interest rate is 3%.

Present and future value tables of $1 at 9% are presented below:

To get $10,000 in five years at a 9% interest rate, what is the amount that should be invested today?

Lyan wishes to get $5000 after four years; the amount that she invested now at 7% can be obtained via using a table for ——————————————————–.

————————-means a series of equal payments paid periodically in which the first payment is made one compounding period after the date of the contract is:

ABC bank offers two types of loans, A and B. Loan A and B have the same principal, payment amount and interest rate.

• Loan A: structured as an annuity due
• Loan B: structured as an ordinary annuity

Loan A has a maturity date that is

If you’re given a table for an ordinary annuity, how do you determine the future value factor of an annuity due for (n) period?

Given below tables of Present and future value tables of $1 at 3%:

Sara won a lottery ticket and wants to cash it in, she has two options: the first one is to receive ten, $190,000 semiannual payments starting today; the second option is to receive a single-amount payment today based on a 6% annual interest rate.

calculate the value of the single-amount payment she can receive today.

Present and future value tables of $1 at 3% are presented below:

Sara won a lottery ticket and likes to cash it in, she has two options: the first one is to receive sixteen, $100,000 semiannual payments starting today; the second option is to receive a single-amount payment today based on a 6% annual interest rate.

Calculate the value of the single-amount payment she can receive today.

Given below Present and future value tables of $1 at 3% :

Joseph was a winner of a lottery ticket and wishes to cash it in. He has to choose between two choices, either to receive eight, $9000 annual payments starting today or to get one lump-sum payment today at a 3% annual interest rate.

What is the value of today’s lump-sum payment?

Present and future value tables of $1 at 9% are presented below.

Monaco’s Inc. sold the right to use one of its patented processes, which resulted in receiving the following cash amounts in return:

$2500 at the end of each year for the coming four years

$4000 as a lump sum amount at the end of the fifth year.

Calculate the present value of the payments, if the interest rate applied is 9%.

A new CEO is hired for Lulu Corporation. The new CEO is promised to be paid a signing bonus of $2 million per year for 10 years, the payment will start at year five after she joins the company. The liability for this bonus when the CEO is hired:

If the interest rate is 12% for 6 periods, which of the following Compound Interest Tables will provide the highest factor for the interest rate?

Andrew Corporation uses special machines in its business operations. In July 20X1, Andrew purchased a set of these machines from Steven corporation for $500,000. The contract terms stated that the machine price is paid on a monthly installment basis over ten years at a rate of 12%. The first installment payment is due at the contract commencement date of July 20X1. Which of the following Compound Interest Tables is appropriate to use in this transaction?

In which of the following scenarios, would the present value of an annuity due of 1 table most probably be used?

Katy has been offered an insurance settlement offer that includes three annual payments over the next three years. The first payment of $45,000 will be made one year from today, followed by payments of $55,000 and $60,000 in the subsequent years. Determine the minimum amount that Katy may accept as a lump sum settlement today based on a discount rate of 8 percent.