A dollar today is worth more than a dollar to be received in the future.

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BUSI 223 Personal Finance Quiz 2 Time Value of Money Answers

 

1. A dollar today is worth more than a dollar to be received in the future.

2. If I am using a financial calculator, what is the least amount of variables that I need to have in order to solve for time value of money?

3. I just started my career at 30.  I want to be able to retire at 58.  I do not have any money to away today, but I can put away $1,000 a month.  How much will I have at retirement if I can earn 6%?

4. Using the future value of calculations to estimate the funds needed to meet a goal takes compounding into account.

5. Present Value describes the process of determining what a cash flow to be received in the future is worth in today’s dollars.

6. In terms of time value of money, a payment is a series of two or more equal amounts that occur at regular time periods.

7. Michael and Sandy purchased a home for $100,000 five years ago.  If it appreciated 6% annually what is it worth today?

8. Elena purchased a stamp collection for $5,000 thirty years ago.  If it appreciated 8% annually, what is it worth today?

9. I want to be a millionaire by the time I retire at age 65.  I am currently 22 years old.  I can earn 4% in a CD.  I have $2,000 that I can put away today.  How much do I need to put away each year in order to reach $1,000,000?

10. The process of finding future value is discounting.