Question : 31.              The amount you must deposit now in your savings : 1311514

31.              The amount you must deposit now in your savings account, paying 5% interest, in order to accumulate $10,000 for your first tuition payment when you start college in 3 years is

a.              $8,500.

b.              $7,830.

c.              $8,638.

d.              $8,860.

32.              The present value of $10,000 to be received in 5 years will be smaller if the discount rate is

a.              increased.

b.              decreased.

c.              not changed.

d.              equal to the stated rate of interest.

33.              Dexter Company is considering purchasing equipment. The equipment will produce the following cash flows:

Year 1$120,000

Year 2$200,000

Dexter requires a minimum rate of return of 10%. What is the maximum price Dexter should pay for this equipment?

a.              $274,380

b.              $165,290

c.              $320,000

d.              $160,000

34.              If Sloane Joyner invests $10,514.81 now and she will receive $30,000 at the end of 11 years, what annual rate of interest will she be earning on her investment?

a.              8%

b.              8.5%

c.              9%

d.              10%

35.              Suzy Douglas has been offered the opportunity of investing $73,540 now. The investment will earn 8% per year and at the end of its life will return $200,000 to Suzy. How many years must Suzy wait to receive the $200,000?

a.              10

b.              11

c.              12

d.              13

36.              Peter Johnson invests $35,516.80 now for a series of $5,000 annual returns beginning one year from now. Peter will earn 10% on the initial investment. How many annual payments will Peter receive?

a.              10

b.              12

c.              13

d.              15

37.              In order to compute the present value of an annuity, it is necessary to know the

1.discount rate.

2.number of discount periods and the amount of the periodic payments or receipts.

a.              1

b.              2

c.              both 1 and 2

d.              something in addition to 1 and 2

38.              A $10,000, 6%, 5-year note payable that pays interest quarterly would be discounted back to its present value by using tables that would indicate which one of the following period-interest combinations?

a.5 interest periods, 6% interest

b.20 interest periods, 6% interest

c.20 interest periods, 1.5% interest

d.5 interest periods, 1.5% interest

39.              Hazel Company has just purchased equipment that requires annual payments of $40,000 to be paid at the end of each of the next 4 years. The appropriate discount rate is 15%. What is the present value of the payments?

a.$114,199

b.$160,000

c.$46,975

d.$150,135

40.              Perdue Company has purchased equipment that requires annual payments of $30,000 to be paid at the end of each of the next 6 years. The appropriate discount rate is 12%. What amount will be used to record the equipment?

a.$180,000

b.$123,342

c.$165,772

d.$115,650