1
,2
,Test Bank for Financial & Managerial Accounting, 20th Edition by Jan Williams
+h +h +h +h +h +h +h +h +h +h +h
Answers Included +h
Appendix B +h
1) Future value is the amount that must be invested today at a specific interest rate to recei
+h +h +h +h +h +h +h +h +h +h +h +h +h +h +h +h
ve a particular amount at some future date.
+h +h +h +h +h +h +h
⊚ true + h
⊚ false + h
2) The present value of an ordinary annuity is the amount that must be invested today
+h +h +h +h +h +h +h +h +h +h +h +h +h +h +h
at a specific interest rate to in order to receive a particular amount at the end of a s
+h +h +h +h +h +h +h +h +h +h +h +h +h +h +h +h +h +h
pecified number of future periods.
+h +h +h +h
⊚ true + h
⊚ false + h
3) The future value of an investment gradually increases toward its present value amount.
+h +h +h +h +h +h +h +h +h +h +h +h
⊚ true + h
⊚ false + h
4) Compound interest assumes that the interest earned on a particular investment is reinvested.
+h +h +h +h +h +h +h +h +h +h +h +h
⊚ true + h
⊚ false + h
5) Discounting a future value amount will determine its present value amount.
+h +h +h +h +h +h +h +h +h +h
⊚ true + h
⊚ false + h
6) The lower the discount rate of an investment, the lower the present value of the investment.
+h +h +h +h +h +h +h +h +h +h +h +h +h +h +h
⊚ true + h
⊚ false + h
7) Annuities provide a series of cash flows to investors at regular intervals for a specified per
+h +h +h +h +h +h +h +h +h +h +h +h +h +h +h
iod of time.
+h +h
⊚ true + h
⊚ false + h
3
, 8) The market price of a bond is equal to the discounted present value of its future cash flows.
+h +h +h +h +h +h +h +h +h +h +h +h +h +h +h +h +h
⊚ true + h
⊚ false + h
9) An ordinary annuity is the discounted present value of a series of cash flows made at
+h +h +h +h +h +h +h +h +h +h +h +h +h +h +h +
hthe beginning of each of a specified number of periods.
+h +h +h +h +h +h +h +h +h
⊚ true + h
⊚ false + h
10) Interest rate percentages can be expressed in a variety of ways, including monthly, quarter
+h +h +h +h +h +h +h +h +h +h +h +h +h
ly, semiannually, and annually.
+h +h +h
⊚ true + h
⊚ false + h
11) The difference between a present value and a related future value amount depends on (1)
+h +h +h +h +h +h +h +h +h +h +h +h +h +h +
the discount rate and (2) the length of time over which the present value accumulates int
h +h +h +h +h +h +h +h +h +h +h +h +h +h +h +h
erest.
⊚ true + h
⊚ false + h
12) The liability for post-
+h +h +h
retirement benefits is reported at the discounted present value of anticipated future cash o
+h +h +h +h +h +h +h +h +h +h +h +h +h
utlays to retired employees in the form of pensions, health insurance premiums, etc.
+h +h +h +h +h +h +h +h +h +h +h +h
⊚ true + h
⊚ false + h
13) As discount rates used to value investments increase, the present values of those investme
+h +h +h +h +h +h +h +h +h +h +h +h +h
nts decreases.
+h
⊚ true + h
⊚ false + h
4
,2
,Test Bank for Financial & Managerial Accounting, 20th Edition by Jan Williams
+h +h +h +h +h +h +h +h +h +h +h
Answers Included +h
Appendix B +h
1) Future value is the amount that must be invested today at a specific interest rate to recei
+h +h +h +h +h +h +h +h +h +h +h +h +h +h +h +h
ve a particular amount at some future date.
+h +h +h +h +h +h +h
⊚ true + h
⊚ false + h
2) The present value of an ordinary annuity is the amount that must be invested today
+h +h +h +h +h +h +h +h +h +h +h +h +h +h +h
at a specific interest rate to in order to receive a particular amount at the end of a s
+h +h +h +h +h +h +h +h +h +h +h +h +h +h +h +h +h +h
pecified number of future periods.
+h +h +h +h
⊚ true + h
⊚ false + h
3) The future value of an investment gradually increases toward its present value amount.
+h +h +h +h +h +h +h +h +h +h +h +h
⊚ true + h
⊚ false + h
4) Compound interest assumes that the interest earned on a particular investment is reinvested.
+h +h +h +h +h +h +h +h +h +h +h +h
⊚ true + h
⊚ false + h
5) Discounting a future value amount will determine its present value amount.
+h +h +h +h +h +h +h +h +h +h
⊚ true + h
⊚ false + h
6) The lower the discount rate of an investment, the lower the present value of the investment.
+h +h +h +h +h +h +h +h +h +h +h +h +h +h +h
⊚ true + h
⊚ false + h
7) Annuities provide a series of cash flows to investors at regular intervals for a specified per
+h +h +h +h +h +h +h +h +h +h +h +h +h +h +h
iod of time.
+h +h
⊚ true + h
⊚ false + h
3
, 8) The market price of a bond is equal to the discounted present value of its future cash flows.
+h +h +h +h +h +h +h +h +h +h +h +h +h +h +h +h +h
⊚ true + h
⊚ false + h
9) An ordinary annuity is the discounted present value of a series of cash flows made at
+h +h +h +h +h +h +h +h +h +h +h +h +h +h +h +
hthe beginning of each of a specified number of periods.
+h +h +h +h +h +h +h +h +h
⊚ true + h
⊚ false + h
10) Interest rate percentages can be expressed in a variety of ways, including monthly, quarter
+h +h +h +h +h +h +h +h +h +h +h +h +h
ly, semiannually, and annually.
+h +h +h
⊚ true + h
⊚ false + h
11) The difference between a present value and a related future value amount depends on (1)
+h +h +h +h +h +h +h +h +h +h +h +h +h +h +
the discount rate and (2) the length of time over which the present value accumulates int
h +h +h +h +h +h +h +h +h +h +h +h +h +h +h +h
erest.
⊚ true + h
⊚ false + h
12) The liability for post-
+h +h +h
retirement benefits is reported at the discounted present value of anticipated future cash o
+h +h +h +h +h +h +h +h +h +h +h +h +h
utlays to retired employees in the form of pensions, health insurance premiums, etc.
+h +h +h +h +h +h +h +h +h +h +h +h
⊚ true + h
⊚ false + h
13) As discount rates used to value investments increase, the present values of those investme
+h +h +h +h +h +h +h +h +h +h +h +h +h
nts decreases.
+h
⊚ true + h
⊚ false + h
4
