10. Time Value of Money

Which term best describes the process where interest is earned on both the initial principal and on interest previously earned?

The interest rate risk premium is the:

The discount rate that results in a net present value of \$0 is the:

Raul deposited \$5,000 into a savings account that pays an annual interest rate of 6%, compounded annually. After 3 years, how much interest did Raul earn through compound interest in his savings account?

In the present value of an ordinary annuity formula, which of the following correctly represents the formula to calculate the present value (PV) of an ordinary annuity with payment amount \(PMT\), interest rate \(r\) per period, and \(n\) periods?

What is the present value of \$1 to be received in 3 years, discounted at an annual rate of 6%?

What is the effective annual rate (EAR) for an investment that pays 10\% interest compounded annually?

Which of the following methods is used to calculate the present value of a future cash flow?

Which formula below represents a present value factor?

What is the formula to calculate the monthly payment (PMT) on a 60-month loan with principal \(P\), annual interest rate \(r\), and monthly payments?

What is the present value of a \$350 payment to be received in one year if the discount rate is 10\%?

Borrowing money to pursue an advanced degree makes sense if:

A loan has an APR of 8.5\% and an EAR of 8.5\%. Given this, the loan must:

Given the following information, solve for the unknown annual interest rate (\(r\)):An investment of \$5,000 grows to \$7,500 in 5 years with interest compounded annually. What is the annual interest rate?A) 8.45% B) 10.00% C) 12.47% D) 15.00%

Inga has an outstanding loan with a remaining balance of \$12,000. She makes fixed annual payments of \$3,000 at an annual interest rate of 5\%. Using the time value of money equations, how many more years will it take Inga to pay off the loan?