11) The future value of 1 will always be: A) equal to 1. B) greater than 1. C) less than 1. D) equal to the interest rate. 12) In present value calculations, the process of determining the...





11) The future value of 1 will always be:



A) equal to 1.



B) greater than 1.



C) less than 1.



D) equal to the interest rate.





12) In present value calculations, the process of determining the present value of a single sum of money is called:



A) allocating.



B) pricing.



C) negotiating.



D) discounting.





13) A single amount of $5,000 is to be received in 3 years. If the single amount is discounted at 6% for 3 periods, the present value is ________. The present value of one for 3 periods at 6% is 0.84. The present value of an ordinary annuity of one for 3 periods at 6% is 2.673.



A) $4,200.



B) $4,450.



C) $5,000.



D) $13,365.





14) Which of the following discount rates will produce the smallest present value of a single sum of money?



A) 4%



B) 6%



C) 7%



D) 9%



15) Cooper Company has purchased equipment that requires annual payments of $20,000 to be paid at the end of each of the next 6 years. The discount rate is 12%. The present value of one for six periods at 12% is 0.507. The present value of an ordinary annuity of one for six periods at 12% is 4.111. What amount will be assigned to the equipment?



A) $60,840



B) $82,220



C) $110,515



D) $120,000





16) On January 1, 2014, bonds with a face value of $100,000 were sold. The bonds mature on January 1, 2024. The stated rate of interest is 8%. The bonds pay interest semiannually on July 1 and January 1. The market rate of interest is 10%. What is the market price of the bonds? The present value of 1 for 20 periods at 5% is 0.377. The present value of an ordinary annuity of $1 for 20 periods at 5% is 12.462. The present value of 1 for 20 periods at 4% is 0.456. The present value of an ordinary annuity of $1 for 20 periods at 4% is 13.59.



A) $87,548



B) $92,346



C) $99,960



D) $100,000





17) On January 1, 2014, bonds with a face value of $100,000 were sold. The bonds mature on January 1, 2024. The stated rate of interest is 9% annually. The bonds pay interest semiannually on July 1 and January 1. The market rate of interest is 10% annually. What is the market price of the bonds? The present value of 1 for 20 periods at 5% is 0.377. The present value of an ordinary annuity of $1 for 20 periods at 5% is 12.462. The present value of 1 for 10 periods at 10% is 0.386. The present value of an ordinary annuity of $1 for 10 periods at 10% is 6.145.



A) $93,779



B) $93,905



C) $100,000



D) $102,000







May 15, 2022
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