1
Financial and Managerial Accounting, 8e (Wild)
Appendix B Time Value of Money
1) Interest is the borrower’s payment to the owner of an asset, for its use.
2) From the perspective of an account holder, a savings account is a liability with interest.
3) An interest rate is also called a discount rate.
2
4) Present and future value computations enable companies to measure or estimate the interest
component of holding assets or liabilities over time.
5) The number of periods in a present value calculation may only be expressed in years.
3
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%
8%
9%
10%
12%
3
3.0909
3.1216
3.1525
3.1836
3.2464
3.2781
3.3100
3.3744
4
4.1836
4.2465
4.3101
4.3746
4.5061
4.5731
4.6410
4.7793
5
5.3091
5.4163
5.5256
5.6371
5.8666
5.9847
6.1051
6.3528
6
6.4684
6.6330
6.8019
6.9753
7.3359
7.5233
7.7156
8.1152
7
7.6625
7.8983
8.1420
8.3938
8.9228
9.2004
9.4872
10.0890
8
8.8923
9.2142
9.5491
9.8975
10.6366
11.0285
11.4359
12.2997
9
10.1591
10.5828
11.0266
11.4913
12.4876
13.0210
13.5795
14.7757
10
11.4639
12.0061
12.5779
13.1808
14.4866
15.1929
15.9374
17.5487
4
6) 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.)
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.
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.
5
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%
8%
9%
10%
12%
3
3.0909
3.1216
3.1525
3.1836
3.2464
3.2781
3.3100
3.3744
4
4.1836
4.2465
4.3101
4.3746
4.5061
4.5731
4.6410
4.7793
5
5.3091
5.4163
5.5256
5.6371
5.8666
5.9847
6.1051
6.3528
6
6.4684
6.6330
6.8019
6.9753
7.3359
7.5233
7.7156
8.1152
7
7.6625
7.8983
8.1420
8.3938
8.9228
9.2004
9.4872
10.0890
8
8.8923
9.2142
9.5491
9.8975
10.6366
11.0285
11.4359
12.2997
9
10.1591
10.5828
11.0266
11.4913
12.4876
13.0210
13.5795
14.7757
10
11.4639
12.0061
12.5779
13.1808
14.4866
15.1929
15.9374
17.5487
6
9) 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.)
10) 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.)
11) Future value can be found if the interest rate (i), the number of periods (n), and the present
value (p) are known.
7
12) The number of periods in a future value calculation may only be expressed in years.
8
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%
8%
9%
10%
12%
3
3.0909
3.1216
3.1525
3.1836
3.2464
3.2781
3.3100
3.3744
4
4.1836
4.2465
4.3101
4.3746
4.5061
4.5731
4.6410
4.7793
5
5.3091
5.4163
5.5256
5.6371
5.8666
5.9847
6.1051
6.3528
6
6.4684
6.6330
6.8019
6.9753
7.3359
7.5233
7.7156
8.1152
7
7.6625
7.8983
8.1420
8.3938
8.9228
9.2004
9.4872
10.0890
8
8.8923
9.2142
9.5491
9.8975
10.6366
11.0285
11.4359
12.2997
9
10.1591
10.5828
11.0266
11.4913
12.4876
13.0210
13.5795
14.7757
10
11.4639
12.0061
12.5779
13.1808
14.4866
15.1929
15.9374
17.5487
9
13) 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.)
14) 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.)
15) An annuity is a series of equal payments occurring at equal intervals.
10
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.
17) A series of equal payments made or received at the end of each period is an ordinary annuity.
11
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%
8%
9%
10%
12%
3
3.0909
3.1216
3.1525
3.1836
3.2464
3.2781
3.3100
3.3744
4
4.1836
4.2465
4.3101
4.3746
4.5061
4.5731
4.6410
4.7793
5
5.3091
5.4163
5.5256
5.6371
5.8666
5.9847
6.1051
6.3528
6
6.4684
6.6330
6.8019
6.9753
7.3359
7.5233
7.7156
8.1152
7
7.6625
7.8983
8.1420
8.3938
8.9228
9.2004
9.4872
10.0890
8
8.8923
9.2142
9.5491
9.8975
10.6366
11.0285
11.4359
12.2997
9
10.1591
10.5828
11.0266
11.4913
12.4876
13.0210
13.5795
14.7757
10
11.4639
12.0061
12.5779
13.1808
14.4866
15.1929
15.9374
17.5487
12
18) 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.)
19) The present value of four $10,000 semiannual payments invested for 2 years at 12%
compounded semiannually is $43,746. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use
appropriate factor(s) from the tables provided.)
20) 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.)
13
21) 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.)
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.
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.
14
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.
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%
15
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
16
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%
8%
9%
10%
12%
3
3.0909
3.1216
3.1525
3.1836
3.2464
3.2781
3.3100
3.3744
4
4.1836
4.2465
4.3101
4.3746
4.5061
4.5731
4.6410
4.7793
5
5.3091
5.4163
5.5256
5.6371
5.8666
5.9847
6.1051
6.3528
6
6.4684
6.6330
6.8019
6.9753
7.3359
7.5233
7.7156
8.1152
7
7.6625
7.8983
8.1420
8.3938
8.9228
9.2004
9.4872
10.0890
8
8.8923
9.2142
9.5491
9.8975
10.6366
11.0285
11.4359
12.2997
9
10.1591
10.5828
11.0266
11.4913
12.4876
13.0210
13.5795
14.7757
10
11.4639
12.0061
12.5779
13.1808
14.4866
15.1929
15.9374
17.5487
17
27) 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
28) 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
18
29) 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
30) 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
19
31) Patricia wants to invest a sum of money today that will yield $10,000 at the end of 6 years.
Assuming she can earn an interest rate of 6% compounded annually, how much must she invest
today? (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the
tables provided.)
A) $7,050
B) $9,400
C) $6,000
D) $8,836
E) $8,306
32) 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
20
33) 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
34) 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