FIN 300 CH 5 (Latest Update )
Questions and Verified Answers {Grade A}
100 % Correct - BYU
Kurt won a lottery and will receive $1,000 a year for the next 50 years. The value of his
winnings today discounted at his discount rate is called which one of the following?
Simple amount.
Present value.
Compounded value.
Single amount.
Future value. - correct answer Present value.
Kurt won a lottery and will receive $1,000 a year for the next 50 years. The value of his
winnings today discounted at his discount rate is called which one of the following?
A. Present value.
B. Future value.
C. Single amount.
D. Compounded value.
E. Simple amount. - correct answer A. Present value.
Which of these will increase the present value of an amount to be received sometime
in the future?
A. Decrease in the future value.
B. Decrease in the interest rate.
C. Decrease in both the future value and the number of time periods.
, FIN 300 CH 5 (Latest Update )
Questions and Verified Answers {Grade A}
100 % Correct - BYU
D. Increase in the discount rate.
E. Increase in the time until the amount is received. - correct answer B. Decrease in
the interest rate.
This morning, DJ's invested $238,000 to help fund a company expansion project
planned for three years from now. How much additional money will the firm have
three years from now if it can earn 4 percent rather than 3.5 percent on its savings? -
correct answer $3,842.78
Future value = $238,000 ×(1 + .04)3 = $267,717.63
Future value = $238,000 ×(1 + .035)3 = $263,874.85
Difference = $267,717.63 - 263,874.85 = $3,842.78
You just received $25,000 from an insurance settlement and have decided to invest it
for your retirement. Currently, your goal is to retire 40 years from today. How much
more will you have in your account on the day you retire if you can earn an average
return of 8.2 percent rather than just 8 percent? - correct answer $41,718.03
Future value = $25,000 ×(1 + .082)40 = $584,831.07
Future value = $25,000 ×(1 + .08)40 = $543,113.04
Difference = $584,831.07 - 543,113.04 = $41,718.03
Questions and Verified Answers {Grade A}
100 % Correct - BYU
Kurt won a lottery and will receive $1,000 a year for the next 50 years. The value of his
winnings today discounted at his discount rate is called which one of the following?
Simple amount.
Present value.
Compounded value.
Single amount.
Future value. - correct answer Present value.
Kurt won a lottery and will receive $1,000 a year for the next 50 years. The value of his
winnings today discounted at his discount rate is called which one of the following?
A. Present value.
B. Future value.
C. Single amount.
D. Compounded value.
E. Simple amount. - correct answer A. Present value.
Which of these will increase the present value of an amount to be received sometime
in the future?
A. Decrease in the future value.
B. Decrease in the interest rate.
C. Decrease in both the future value and the number of time periods.
, FIN 300 CH 5 (Latest Update )
Questions and Verified Answers {Grade A}
100 % Correct - BYU
D. Increase in the discount rate.
E. Increase in the time until the amount is received. - correct answer B. Decrease in
the interest rate.
This morning, DJ's invested $238,000 to help fund a company expansion project
planned for three years from now. How much additional money will the firm have
three years from now if it can earn 4 percent rather than 3.5 percent on its savings? -
correct answer $3,842.78
Future value = $238,000 ×(1 + .04)3 = $267,717.63
Future value = $238,000 ×(1 + .035)3 = $263,874.85
Difference = $267,717.63 - 263,874.85 = $3,842.78
You just received $25,000 from an insurance settlement and have decided to invest it
for your retirement. Currently, your goal is to retire 40 years from today. How much
more will you have in your account on the day you retire if you can earn an average
return of 8.2 percent rather than just 8 percent? - correct answer $41,718.03
Future value = $25,000 ×(1 + .082)40 = $584,831.07
Future value = $25,000 ×(1 + .08)40 = $543,113.04
Difference = $584,831.07 - 543,113.04 = $41,718.03
