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Ch 04 Time Value of Money
d.
An account that pays 7% nominal interest with daily (365-day) compounding.
e.
An account that pays 7% nominal interest with monthly compounding.
66. Which of the following bank accounts has the lowest effective annual return?
a.
An account that pays 8% nominal interest with daily (365-day) compounding.
b.
An account that pays 8% nominal interest with monthly compounding.
c.
An account that pays 8% nominal interest with annual compounding.
d.
An account that pays 7% nominal interest with daily (365-day) compounding.
e.
An account that pays 7% nominal interest with monthly compounding.
Ch 04 Time Value of Money
67. You plan to invest some money in a bank account. Which of the following banks provides you with the highest
effective rate of interest?
a.
Bank 1; 6.1% with annual compounding.
b.
Bank 2; 6.0% with monthly compounding.
c.
Bank 3; 6.0% with annual compounding.
d.
Bank 4; 6.0% with quarterly compounding.
e.
Bank 5; 6.0% with daily (365-day) compounding.
Ch 04 Time Value of Money
68. Ellen now has $125. How much would she have after 8 years if she leaves it invested at 8.5% with annual
compounding?
a.
$205.83
b.
$216.67
c.
$228.07
d.
$240.08
e.
$252.08
Ch 04 Time Value of Money
69. How much would Roderick have after 6 years if he has $500 now and leaves it invested at 5.5% with annual
compounding?
a.
$591.09
b.
$622.20
c.
$654.95
d.
$689.42
e.
$723.89
70. JG Asset Services is recommending that you invest $1,500 in a 5-year certificate of deposit (CD) that pays 3.5%
interest, compounded annually. How much will you have when the CD matures?
a.
$1,781.53
b.
$1,870.61
c.
$1,964.14
d.
$2,062.34
e.
$2,165.46
Ch 04 Time Value of Money
71. Your bank offers a 10-year certificate of deposit (CD) that pays 6.5% interest, compounded annually. If you invest
$2,000 in the CD, how much will you have when it matures?
a.
$3,754.27
b.
$3,941.99
c.
$4,139.09
d.
$4,346.04
e.
$4,563.34
Ch 04 Time Value of Money
72. Cyberhost Corporation's sales were $225 million last year. If sales grow at 6% per year, how large (in millions) will
they be 5 years later?
a.
$271.74
b.
$286.05
c.
$301.10
d.
$316.16
e.
$331.96
73. Cochrane Associate's net sales last year were $525 million. If sales grow at 7.5% per year, how large (in millions) will
they be 8 years later?
a.
$845.03
b.
$889.51
c.
$936.33
Ch 04 Time Value of Money
d.
$983.14
e.
$1,032.30
74. How much would $1, growing at 3.5% per year, be worth after 75 years?
a.
$12.54
b.
$13.20
c.
$13.86
d.
$14.55
e.
$15.28
Ch 04 Time Value of Money
75. How much would $100, growing at 5% per year, be worth after 75 years?
a.
$3,689.11
b.
$3,883.27
c.
$4,077.43
d.
$4,281.30
e.
$4,495.37
76. Your bank offers a savings account that pays 3.5% interest, compounded annually. If you invest $1,000 in the account,
Ch 04 Time Value of Money
then how much will it be worth at the end of 25 years?
a.
$2,245.08
b.
$2,363.24
c.
$2,481.41
d.
$2,605.48
e.
$2,735.75
77. Your bank offers a savings account that pays 3.5% interest, compounded annually. How much will $500 invested
today be worth at the end of 25 years?
a.
$1,122.54
b.
$1,181.62
c.
$1,240.70
d.
$1,302.74
e.
$1,367.88
Ch 04 Time Value of Money
78. Suppose a State of North Carolina bond will pay $1,000 ten years from now. If the going interest rate on these 10-year
bonds is 5.5%, how much is the bond worth today?
a.
$585.43
b.
$614.70
c.
$645.44
d.
$677.71
e.
$711.59
Ch 04 Time Value of Money
79. Suppose a State of New Mexico bond will pay $1,000 eight years from now. If the going interest rate on these 8-year
bonds is 5.5%, how much is the bond worth today?
a.
$651.60
b.
$684.18
c.
$718.39
d.
$754.31
e.
$792.02
80. How much would $20,000 due in 50 years be worth today if the discount rate were 7.5%?
a.
$438.03
b.
$461.08
c.
$485.35
d.
$510.89
e.
$537.78
Ch 04 Time Value of Money
81. You expect to receive $5,000 in 25 years. How much is it worth today if the discount rate is 5.5%?
a.
$1,067.95
b.
$1,124.16
c.
$1,183.33
d.
$1,245.61
e.
$1,311.17
Ch 04 Time Value of Money
82. The going rate of interest on a 5-year treasury bond is 4.25%. You have one that will pay $2,500 five years from now.
How much is the bond worth today?
a.
$1,928.78
b.
$2,030.30
c.
$2,131.81
d.
$2,238.40
e.
$2,350.32
83. Suppose a Google.com bond will pay $4,500 ten years from now. If the going interest rate on safe 10-year bonds is
4.25%, how much is the bond worth today?
a.
$2,819.52
Ch 04 Time Value of Money
b.
$2,967.92
c.
$3,116.31
d.
$3,272.13
e.
$3,435.74
84. You have just purchased a U.S. Treasury bond for $747.25. No payments will be made until the bond matures 5 years
from now, at which time it will be redeemed for $1,000. What interest rate will you earn on this bond?
a.
4.37%
b.
4.86%
c.
5.40%
d.
6.00%
e.
6.60%
Ch 04 Time Value of Money
85. You have purchased a U.S. Treasury bond for $3,000. No payments will be made until the bond matures 10 years
from now, at which time it will be redeemed for $5,000. What interest rate will you earn on this bond?
a.
3.82%
b.
4.25%
c.
4.72%
d.
5.24%
e.
5.77%
Ch 04 Time Value of Money
86. Ten years ago, Kronan Corporation earned $0.50 per share. Its earnings this year were $2.20. What was the growth
rate in earnings per share (EPS) over the 10-year period?
a.
15.17%
b.
15.97%
c.
16.77%
d.
17.61%
e.
18.49%
87. Wildwoods, Inc. earned $1.50 per share five years ago. Its earnings this year were $3.20. What was the growth rate in
earnings per share (EPS) over the 5-year period?
a.
15.54%
b.
16.36%
c.
17.18%
d.
18.04%
e.
18.94%
Ch 04 Time Value of Money
88. You have $5,000 invested in a bank that pays 3.8% annually. How long will it take for your funds to triple?
a.
23.99
b.
25.26
c.
26.58
d.
27.98
e.
29.46
Ch 04 Time Value of Money
89. Your bank pays 4% interest annually. You have $2,500 invested in the bank. How long will it take for your funds to
double?
a.
14.39
b.
15.15
c.
15.95
d.
16.79
e.
17.67
90. Brockman Corporation's earnings per share were $3.50 last year, and its growth rate during the prior 5 years was 9.0%
per year. If that growth rate were maintained, how many years would it take for Brockman's EPS to triple?
a.
9.29
b.
10.33
Ch 04 Time Value of Money
c.
11.47
d.
12.75
e.
14.02
91. Your investment account pays 8.0%, compounded annually. If you invest $5,000 today, how many years will it take
for your investment to grow to $9,140.20?
a.
5.14
b.
5.71
c.
6.35
d.
7.05
e.
7.84
Ch 04 Time Value of Money
92. Your investment advisor has recommended your invest in bonds that pay 6.0%, compounded annually. If you invest
$10,000 today, how many years will it take for your investment to grow to $30,000?
a.
12.37
b.
13.74
c.
15.27
d.
16.97
e.
18.85
