11 an annuity is a series of a equal amounts paid or received over a specified numbe 4352179

11.An annuity is a series of

a.equal amounts paid or received over a specified number of unequal time periods

b.unequal amounts paid or received over a specified number of equal time periods

c.equal amounts paid or received over an unspecified number of equal time periods

d.equal amounts paid or received over a specified number of equal time periods

12.An annuity in which amounts are paid or received at the end of each fiscal period is a(n)

a.annuity due

b.ordinary annuity

c.compound annuity

d.present value annuity

13.At the end of four periods, what will be the future value of four ordinary annuity payments of $6,000 earning 7% interest?

a.$17,760

b.$27,865

c.$26,640

d.$26,220

14.Mailer Company invested $15,000 for three years at a rate of 6.5%. By how much did the investment grow during the third year?

a.$3,119

b.$1,106

c.$1,048

d.$975

15.The following investments are available. All cash flows occur at the end of the respective years.

I.Pays $2,400 per year for 3 years. The rate of return expected by investors is 5%.

II.Pays $300 the first year, zero the second year and $6,900 the third year. Investors expect a 3% rate of return.

III.Pays $3,600 the first year, $1,800 the second year, and $1,800 the third year. Investors expect a 10% rate of return.

Which investment opportunity has the highest present value?

a.investment I

b.investment II

c.investment III

d.investment I and III

16.Hospice Care, Inc. is seeking a bank loan to finance expanded working capital over the next two years. The firm has budgeted $1,000 for monthly loan payments. If the firm can borrow at 1% monthly, how large a loan can be obtained?

a.$20,000

b.$21,243

c.$24,000

d.$25,716

e.$29,052

17.Which of the following best expresses the concept of compound interest?

a.calculating interest on an annuity

b.earning interest on interest already earned

c.making complicated interest calculations

d.making more than one interest payment

18.Determining the amount a series of equal deposits necessary to accumulate $40,000 in five years involves which of the following concepts?

a.present value of an annuity

b.present value of a single amount

c.future value of an annuity

d.future value of a single amount

19.The ______ value of an amount is the value of that amount on a particular date prior to the time the amount is paid or received.

a.present

b.current

c.future

d.investment

20.Determining the monthly payments required to pay off a 5-year auto loan involves which of the following concepts?

a.present value of an annuity

b.present value of a single amount

c.present value of an apportionment

d.future value of an annuity

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