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FINA 3313 TEST 1 REVIEW 2026
ACTUAL QUESTIONS WITH VERIFIED
ANSWERS.
What is the future value of $10,000 on deposit for 5 years at
6% simple interest? - correct answer-$13,000.00
How much interest is earned in just the third year on a $1,000
deposit that earns 7% interest compounded annually? - correct
answer-1000*(1+0.07)*(1+0.07)*0.07=80.14
$80.14
Assume the total expense for your current year in college
equals $20,000. How much would your parents have needed to
invest 21 years ago in an account paying 8% compounded
annually to cover this amount? - correct answer-FV=20,000,
I/Y=8, N=21, PMT=0, CPT PV=
$3,973.11
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How long must one wait (to the nearest year) for an initial
investment of $1,000 to triple in value if the investment earns
8% compounded annually? - correct answer-14.27 years
If the future value of an annuity due is $25,000 and $24,000 is
the future value of an ordinary annuity that is otherwise similar
to the annuity due, what is the implied discount rate? - correct
answer-Still remember PV(Annuity)*(1+r)=PV (Annuity Due).
R=25000/24000-1=4.17%
4.17%
How much must be invested today in order to generate a 5-
year annuity of $1,000 per year, with the first payment 1 year
from today, at an interest rate of 12%? - correct answer-
$3,604.78
You will be receiving cash flows of: $1,000 today, $2,000 at end
of year 1, $4,000 at end of year 3, and $6,000 at end of year 5.
What is the present value of these cash flows at an interest rate
of 7%? - correct answer-$10,412.27
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A perpetuity of $5,000 per year beginning today is said to offer
a 15% interest rate. What is its present value? - correct answer-
$33,333.33
A corporation has promised to pay $1,000 20 years from today
for each bond sold now. No interest will be paid on the bonds
during the 20 years, and the bonds are discounted at an
interest rate of 7%, compounded semiannually. Approximately
how much should an investor pay for each bond? - correct
answer-$252.57
In this question, pay attention to "compounded" semiannually.
A bond is like a loan, with a face value (principle 1000 in this
question) to pay at maturity. No interest is paid. Question ask
how much an investor should pay for this bond, AKA, the
present value of this bond today.
N=20 * 2 =40 (seminally compounded) I/Y=
7/2=3.5FV=1000PMT=0,
CPT PV=
Your retirement account has a current balance of $50,000.
What interest rate would need to be earned in order to
accumulate a total of $1,000,000 in 30 years, by adding $6,000
annually? - correct answer-7.24%
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This question shows, PV=-50,000, PMT=-6000, N=30,
FV=1000000, then CPT I/Y=7.24 Be careful of the sign of PV,
PMT and FV.
The present value of an annuity stream of $100 per year is
$614 when valued at a 10% rate. By approximately how much
would the value change if these were annuities due? - correct
answer-$61.40
Approximately how much should be accumulated by the
beginning of retirement to provide a $2,500 monthly check that
will last for 25 years, during which time the fund will earn 6%
interest with monthly compounding? - correct answer-
$388,017.16
With $1.5 million in an account expected to earn 8% annually
over the retiree's 30 years of life expectancy, what annual
annuity can be withdrawn, beginning today? - correct answer-
$123,371.44
PV=1500000, N=30, FV=0, I/Y=8, CPT PMT=?
FINA 3313 TEST 1 REVIEW 2026
ACTUAL QUESTIONS WITH VERIFIED
ANSWERS.
What is the future value of $10,000 on deposit for 5 years at
6% simple interest? - correct answer-$13,000.00
How much interest is earned in just the third year on a $1,000
deposit that earns 7% interest compounded annually? - correct
answer-1000*(1+0.07)*(1+0.07)*0.07=80.14
$80.14
Assume the total expense for your current year in college
equals $20,000. How much would your parents have needed to
invest 21 years ago in an account paying 8% compounded
annually to cover this amount? - correct answer-FV=20,000,
I/Y=8, N=21, PMT=0, CPT PV=
$3,973.11
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How long must one wait (to the nearest year) for an initial
investment of $1,000 to triple in value if the investment earns
8% compounded annually? - correct answer-14.27 years
If the future value of an annuity due is $25,000 and $24,000 is
the future value of an ordinary annuity that is otherwise similar
to the annuity due, what is the implied discount rate? - correct
answer-Still remember PV(Annuity)*(1+r)=PV (Annuity Due).
R=25000/24000-1=4.17%
4.17%
How much must be invested today in order to generate a 5-
year annuity of $1,000 per year, with the first payment 1 year
from today, at an interest rate of 12%? - correct answer-
$3,604.78
You will be receiving cash flows of: $1,000 today, $2,000 at end
of year 1, $4,000 at end of year 3, and $6,000 at end of year 5.
What is the present value of these cash flows at an interest rate
of 7%? - correct answer-$10,412.27
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A perpetuity of $5,000 per year beginning today is said to offer
a 15% interest rate. What is its present value? - correct answer-
$33,333.33
A corporation has promised to pay $1,000 20 years from today
for each bond sold now. No interest will be paid on the bonds
during the 20 years, and the bonds are discounted at an
interest rate of 7%, compounded semiannually. Approximately
how much should an investor pay for each bond? - correct
answer-$252.57
In this question, pay attention to "compounded" semiannually.
A bond is like a loan, with a face value (principle 1000 in this
question) to pay at maturity. No interest is paid. Question ask
how much an investor should pay for this bond, AKA, the
present value of this bond today.
N=20 * 2 =40 (seminally compounded) I/Y=
7/2=3.5FV=1000PMT=0,
CPT PV=
Your retirement account has a current balance of $50,000.
What interest rate would need to be earned in order to
accumulate a total of $1,000,000 in 30 years, by adding $6,000
annually? - correct answer-7.24%
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This question shows, PV=-50,000, PMT=-6000, N=30,
FV=1000000, then CPT I/Y=7.24 Be careful of the sign of PV,
PMT and FV.
The present value of an annuity stream of $100 per year is
$614 when valued at a 10% rate. By approximately how much
would the value change if these were annuities due? - correct
answer-$61.40
Approximately how much should be accumulated by the
beginning of retirement to provide a $2,500 monthly check that
will last for 25 years, during which time the fund will earn 6%
interest with monthly compounding? - correct answer-
$388,017.16
With $1.5 million in an account expected to earn 8% annually
over the retiree's 30 years of life expectancy, what annual
annuity can be withdrawn, beginning today? - correct answer-
$123,371.44
PV=1500000, N=30, FV=0, I/Y=8, CPT PMT=?
