10. Time Value of Money

What is the value of a \$1 single sum to be received in 5 years, discounted at an annual interest rate of 8% compounded annually?

What is the future value of \$1,200 invested for 20 years at an annual interest rate of 6%, compounded annually? (Use the formula: \(FV = PV \times (1 + r)^n\))

If you take out a loan of \$678 at an annual interest rate of 10.5% for one year, how much interest will you pay at the end of the year (assuming simple interest)?

What is the value in year 10 of a \$1,000 cash flow made in year 3 if interest rates are 9\% compounded annually?

If a credit card has an annual percentage rate (APR) of 15.99\%, what is the monthly periodic interest rate (rounded to two decimal places)?

A real rate of return is defined as a rate that has been adjusted for which one of the following?

Which rate is used to calculate the present value of future cash flows in time value of money equations?

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?