Accounting D103 part 2 WGU Exam Questions and Answers Already Passed Latest Update
2025-2026
2
0/1
If an annuity due and an ordinary annuity have the same number of equal payments and the
same interest rates, what is true regarding the present values of each? - Answers Correct
The present value of the annuity due is greater than the present value of the ordinary annuity.
Correct. An annuity due has a higher present value than an ordinary annuity because payments
are made sooner with an annuity due (at the beginning of the period) than with an ordinary
annuity (at the end of the period).
3
0/1
Al Darby wants to withdraw $20,000 (including principal) from an investment fund at the end of
each year for five years.
How should he compute his required initial investment at the beginning of the first year if the
fund earns 10% compounded annually? - Answers $20,000 times the present value of a 5-year,
10% ordinary annuity of 1
Correct. Withdrawals will be periodic (each year), not a one-time withdrawal. Additionally,
withdrawals occur at the end of each period. Therefore, this is an ordinary annuity problem.
1
1/1
Paula purchased a house for $300,000. After providing a 20% down payment, she borrowed the
balance from the local savings and loan under a 30-year 6% mortgage loan requiring equal
monthly installments at the end of each month.
Which time value concept would be used to determine the monthly payment? - Answers Correct
Present value of an ordinary annuity
,Correct. Payments are due periodically at the end of the period (due at the end of each month),
this is a present value of an ordinary annuity problem.
2
1/1
An accountant wishes to find the present value of an annuity of $1 payable at the beginning of
each period at 10% for eight periods. The accountant has only one present value table which
shows the present value of an annuity of $1 payable at the end of each period.
To compute the present value, which present value factor in the 10% column would the
accountant would use? - Answers Correct
Eight periods and multiply by (1 + .10)
Correct. The accountant is trying to calculate the present value of an annuity due, where
payments are made at the beginning of the period. The accountant only has the table for an
ordinary annuity, where payments are made at the end of the period. The number of periods is
not different. The only difference is the amount of interest.
0/1
Which time value money concept would show the largest value of $1 at 12% for three periods? -
Answers Correct
Present value of an annuity due of $1.00
Correct!
1
0/1
Which time value money concept would show the largest value of $1 at 12% for three periods? -
Answers Correct
Present value of an annuity due of $1.00
Correct!
Al Darby wants to withdraw $20,000 (including principal) from an investment fund at the end of
each year for five years.
, How should he compute his required initial investment at the beginning of the first year if the
fund earns 10% compounded annually? - Answers Correct
$20,000 times the present value of a 5-year, 10% ordinary annuity of 1
Correct. Withdrawals will be periodic (each year), not a one-time withdrawal. Additionally,
withdrawals occur at the end of each period. Therefore, this is an ordinary annuity problem.
2
0/1
Barber Company will receive $1,500,000 in 7 years.
If the appropriate interest rate is 10%, compounded annually, which table factor should be used
to calculate the present value of the $1,500,000 - Answers Correct
Present Value of 1, 7 periods at 10%
Correct. Barber will receive one payment in 7 years. This is a present value of a single-sum
problem. There is only one compounding period per year. Therefore, the correct table factor to
use is the Present Value of 1, 7 periods, 10%.
4
0/1
On June 1, 2020, Pitts Company sold some equipment to Gannon Company. The two
companies entered into an installment sales contract at a rate of 8%. The contract required
equal payments each quarter for 4 years with the first payment due on June 1, 2020. Which
compound interest table is appropriate for this situation? - Answers Correct
Present value of an annuity due of 1 (16 periods, 2%)
Correct. Gannon makes periodic payments at the beginning of each period. This a present value
of an annuity due problem. There are 4 compounding periods per year for a total of 16 total
compounding periods. The correct compound interest table to use is the Present Value of
Annuity Due (16 periods, 2%).
5
0/1
2025-2026
2
0/1
If an annuity due and an ordinary annuity have the same number of equal payments and the
same interest rates, what is true regarding the present values of each? - Answers Correct
The present value of the annuity due is greater than the present value of the ordinary annuity.
Correct. An annuity due has a higher present value than an ordinary annuity because payments
are made sooner with an annuity due (at the beginning of the period) than with an ordinary
annuity (at the end of the period).
3
0/1
Al Darby wants to withdraw $20,000 (including principal) from an investment fund at the end of
each year for five years.
How should he compute his required initial investment at the beginning of the first year if the
fund earns 10% compounded annually? - Answers $20,000 times the present value of a 5-year,
10% ordinary annuity of 1
Correct. Withdrawals will be periodic (each year), not a one-time withdrawal. Additionally,
withdrawals occur at the end of each period. Therefore, this is an ordinary annuity problem.
1
1/1
Paula purchased a house for $300,000. After providing a 20% down payment, she borrowed the
balance from the local savings and loan under a 30-year 6% mortgage loan requiring equal
monthly installments at the end of each month.
Which time value concept would be used to determine the monthly payment? - Answers Correct
Present value of an ordinary annuity
,Correct. Payments are due periodically at the end of the period (due at the end of each month),
this is a present value of an ordinary annuity problem.
2
1/1
An accountant wishes to find the present value of an annuity of $1 payable at the beginning of
each period at 10% for eight periods. The accountant has only one present value table which
shows the present value of an annuity of $1 payable at the end of each period.
To compute the present value, which present value factor in the 10% column would the
accountant would use? - Answers Correct
Eight periods and multiply by (1 + .10)
Correct. The accountant is trying to calculate the present value of an annuity due, where
payments are made at the beginning of the period. The accountant only has the table for an
ordinary annuity, where payments are made at the end of the period. The number of periods is
not different. The only difference is the amount of interest.
0/1
Which time value money concept would show the largest value of $1 at 12% for three periods? -
Answers Correct
Present value of an annuity due of $1.00
Correct!
1
0/1
Which time value money concept would show the largest value of $1 at 12% for three periods? -
Answers Correct
Present value of an annuity due of $1.00
Correct!
Al Darby wants to withdraw $20,000 (including principal) from an investment fund at the end of
each year for five years.
, How should he compute his required initial investment at the beginning of the first year if the
fund earns 10% compounded annually? - Answers Correct
$20,000 times the present value of a 5-year, 10% ordinary annuity of 1
Correct. Withdrawals will be periodic (each year), not a one-time withdrawal. Additionally,
withdrawals occur at the end of each period. Therefore, this is an ordinary annuity problem.
2
0/1
Barber Company will receive $1,500,000 in 7 years.
If the appropriate interest rate is 10%, compounded annually, which table factor should be used
to calculate the present value of the $1,500,000 - Answers Correct
Present Value of 1, 7 periods at 10%
Correct. Barber will receive one payment in 7 years. This is a present value of a single-sum
problem. There is only one compounding period per year. Therefore, the correct table factor to
use is the Present Value of 1, 7 periods, 10%.
4
0/1
On June 1, 2020, Pitts Company sold some equipment to Gannon Company. The two
companies entered into an installment sales contract at a rate of 8%. The contract required
equal payments each quarter for 4 years with the first payment due on June 1, 2020. Which
compound interest table is appropriate for this situation? - Answers Correct
Present value of an annuity due of 1 (16 periods, 2%)
Correct. Gannon makes periodic payments at the beginning of each period. This a present value
of an annuity due problem. There are 4 compounding periods per year for a total of 16 total
compounding periods. The correct compound interest table to use is the Present Value of
Annuity Due (16 periods, 2%).
5
0/1
