ACG 4101 CERTIFIED QUALITY EXAM VERIFIED QUESTION AND
DETAILED ANSWERS GUARANTEED PASS NEWEST 2026/27
The Richards Company purchased a machine for $5,000 down
and $300 a month payable at the end of each of the next 36
months. How would the cash price of the machine be
calculated, assuming the annual interest rate is given?
A. $5,000 plus the present value of $10,800 ($300 x 36)
B. $5,000 plus the present value of an annuity due of $300 for
36 periods
C. $15,800
D. $5,000 plus the present value of an ordinary annuity of $300
for 36 periods
D
The cash price is equal to the present value of the future cash
outflows. This includes the $5,000 today plus the value today,
present value, of the $300 payments made at the end of each
month (ordinary annuity).
Given a set of present value tables, an annual interest rate, the
dollar amount of equal payments made, and the number of
semiannual payments, what other information is necessary to
calculate the present value of the series of payments?
A. The future value of the annuity
B. The timing of the payments (whether they are at the
beginning or end of the period)
,C. The rate of inflation
D. No other information is required
B
If the payments are made at the end of each period, it is an
ordinary annuity. If the payments are made at the beginning of
each period, it is an annuity due.
Wellman Company is considering investing in a two-year
project. Wellman's required rate of return is 10%. The present
value of $1 for one period at 10% is 0.909 and for two periods at
10% is 0.826. The project is expected to create cash flows, net
of taxes, of $80,000 in the first year, and $100,000 in the
second year. Wellman should invest in the project if the
project's cost is less than or equal to:
A. $180,000
B. $163,620
C. $155,320
D. $148,680
C
$155,320: ($80,000 × 0.909) + ($100,000 × 0.826).
Wellman Company is considering investing in a two-year
project. Wellman's required rate of return is 10%. The present
value of $1 for one period at 10% is 0.909 and for two periods at
,10% is 0.826. The project is expected to create cash flows, net
of taxes, of $80,000 in the first year, and $100,000 in the
second year. Wellman should invest in the project if the
project's cost is less than or equal to:
Present value of $1 at 7% for 5 periods: 0.713
Present value of an ordinary annuity of $1 at 7% for 5 periods:
4.1
Future value of an ordinary annuity of $1 at 7% for 5 periods:
5.75
Future value of an annuity due of $1 at 7% for 5 periods: 6.15
What is the amount of the required annual deposit?
A. $325,203
B. $347,826
C. $487,805
D. $426,000
A
FV = Ann x FV Annuity Due $ Factor
2,000,000 = Ann x 6.15
2,000,000/6.15 = Ann
Ann = 325,203
$325,203. $2,000,000 ÷ 6.15 (Future value of an annuity due of
$1 at 7% for 5 periods).
, Harry Morgan plans to make 30 quarterly deposits of $200 into
a savings account. The first deposit will be made immediately.
The savings account pays interest at an annual rate of 8%,
compounded quarterly. How much will Harry have
accumulated in the savings account at the end of the seven
and a half-year period?
A. $8,114
B. $24,469
C. $6,000
D. $8,276
D.
$8,276: $200 × 41.3794 (future value of an annuity due for 30
periods at 2%).
*Divide the percentage by 4 (quarterly)
Harry Morgan plans to make 30 quarterly deposits of $200 into
a savings account at the end of each quarter. The savings
account pays interest at an annual rate of 8%, compounded
quarterly. What is the value of the savings account after the 30
quarterly deposits?
A. $8,114
B. $24,469
C. $6,000
DETAILED ANSWERS GUARANTEED PASS NEWEST 2026/27
The Richards Company purchased a machine for $5,000 down
and $300 a month payable at the end of each of the next 36
months. How would the cash price of the machine be
calculated, assuming the annual interest rate is given?
A. $5,000 plus the present value of $10,800 ($300 x 36)
B. $5,000 plus the present value of an annuity due of $300 for
36 periods
C. $15,800
D. $5,000 plus the present value of an ordinary annuity of $300
for 36 periods
D
The cash price is equal to the present value of the future cash
outflows. This includes the $5,000 today plus the value today,
present value, of the $300 payments made at the end of each
month (ordinary annuity).
Given a set of present value tables, an annual interest rate, the
dollar amount of equal payments made, and the number of
semiannual payments, what other information is necessary to
calculate the present value of the series of payments?
A. The future value of the annuity
B. The timing of the payments (whether they are at the
beginning or end of the period)
,C. The rate of inflation
D. No other information is required
B
If the payments are made at the end of each period, it is an
ordinary annuity. If the payments are made at the beginning of
each period, it is an annuity due.
Wellman Company is considering investing in a two-year
project. Wellman's required rate of return is 10%. The present
value of $1 for one period at 10% is 0.909 and for two periods at
10% is 0.826. The project is expected to create cash flows, net
of taxes, of $80,000 in the first year, and $100,000 in the
second year. Wellman should invest in the project if the
project's cost is less than or equal to:
A. $180,000
B. $163,620
C. $155,320
D. $148,680
C
$155,320: ($80,000 × 0.909) + ($100,000 × 0.826).
Wellman Company is considering investing in a two-year
project. Wellman's required rate of return is 10%. The present
value of $1 for one period at 10% is 0.909 and for two periods at
,10% is 0.826. The project is expected to create cash flows, net
of taxes, of $80,000 in the first year, and $100,000 in the
second year. Wellman should invest in the project if the
project's cost is less than or equal to:
Present value of $1 at 7% for 5 periods: 0.713
Present value of an ordinary annuity of $1 at 7% for 5 periods:
4.1
Future value of an ordinary annuity of $1 at 7% for 5 periods:
5.75
Future value of an annuity due of $1 at 7% for 5 periods: 6.15
What is the amount of the required annual deposit?
A. $325,203
B. $347,826
C. $487,805
D. $426,000
A
FV = Ann x FV Annuity Due $ Factor
2,000,000 = Ann x 6.15
2,000,000/6.15 = Ann
Ann = 325,203
$325,203. $2,000,000 ÷ 6.15 (Future value of an annuity due of
$1 at 7% for 5 periods).
, Harry Morgan plans to make 30 quarterly deposits of $200 into
a savings account. The first deposit will be made immediately.
The savings account pays interest at an annual rate of 8%,
compounded quarterly. How much will Harry have
accumulated in the savings account at the end of the seven
and a half-year period?
A. $8,114
B. $24,469
C. $6,000
D. $8,276
D.
$8,276: $200 × 41.3794 (future value of an annuity due for 30
periods at 2%).
*Divide the percentage by 4 (quarterly)
Harry Morgan plans to make 30 quarterly deposits of $200 into
a savings account at the end of each quarter. The savings
account pays interest at an annual rate of 8%, compounded
quarterly. What is the value of the savings account after the 30
quarterly deposits?
A. $8,114
B. $24,469
C. $6,000
