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1. When saving for future expenditures, we can add the ________ of contributions over time
to see what the total will be worth at some point in time.
2. When moving from the left to the right of a time line, we are using:
3. Level sets of frequent, consistent cash flows are called:
4. The length of time of the annuity is very important in accumulating wealth within an
annuity. What other factor also has this effect?
5. In order to discount multiple cash flows to the present, one would use:
6. Your credit rating and current economic conditions will determine:
7. When interest rates are lower, borrowers can:
8. The present value of annuity payments made far into the future is:
9. A perpetuity, a special form of annuity, pays cash flows:
10. Many people who want to start investing for their future want to start today, which
implies an annuity stream that is paid at the beginning of the period. Beginning-of-period cash
flows are referred to as:
11. To compute the present or future value of an annuity due, one computes the value of an
ordinary annuity and then:
12. When computing the future value of an annuity, the higher the compound frequency:
13. Compounding monthly versus annually causes the interest rate to be effectively higher,
and thus the future value:
14. The simple form of an annualized interest rate is called the annual percentage rate
(APR). The effective annual rate (EAR) is a:
15. People refinance their home mortgages:
16. Loan amortization schedules show:
17. When you get your credit card bill, it will offer a minimum payment, which:
18. When you get your credit card bill, if you make a payment larger than the minimum
payment:
19. Future Value Compute the future value in year 10 of a $1,000 deposit in year 1 and
another $1,500 deposit at the end of year 4 using an 8 percent interest rate.
20. Future Value Compute the future value in year 4 of a $500 deposit in year 1 and another
$1,000 deposit at the end of year 3 using a 5 percent interest rate.
21. Future Value of an Annuity What is the future value of an $800 annuity payment over 15
years if the interest rates are 6 percent?
22. Future Value of an Annuity What is the future value of a $1,000 annuity payment over 4
years if the interest rates are 8 percent?
23. Present Value What is the present value of a $500 deposit in year 1 and another $100
deposit at the end of year 4 if interest rates are 5 percent?
24. Present Value What is the present value of a $250 deposit in year 1 and another $50
deposit at the end of year 6 if interest rates are 10 percent?
25. Present Value of an Annuity What is the present value of a $300 annuity payment over 5
years if interest rates are 8 percent?
26. Present Value of an Annuity What is the present value of a $600 annuity payment over 4
years if interest rates are 6 percent?
27. Present Value of a Perpetuity What is the present value, when interest rates are 6.5
percent, of a $100 payment made every year forever?
28. Present Value of a Perpetuity What is the present value, when interest rates are 10
percent, of a $75 payment made every year forever?
29. Present Value of an Annuity Due If the present value of an ordinary, 4-year annuity is
$1,000 and interest rates are 6 percent, what is the present value of the same annuity due?
