Question : 138.A business accepts a 9 percent, $25,000 note due in : 1244458

138.A business accepts a 9 percent, $25,000 note due in 120 days. Assuming simple interest, how much (amount rounded) will the business receive when the note falls due?

 

a.

$25,000

b.

$25,075

c.

$27,260

d.

$25,740

 

 

 

139.Which of the following statements is true regarding the time value of money?

 

a.

Compound interest will produce equal amounts of interest each period on a fixed deposit.

b.

It is better to receive $1 now than a year from now.

c.

Earning simple interest is more beneficial than earning compound interest.

d.

When making a purchase, it is better to make payment as soon as possible.

 

 

 

140.Which of the following phrases is not descriptive of an ordinary annuity?

 

a.

Series of equal payments.

b.

Both present and future value can be calculated.

c.

Compound interest assumed.

d.

Payments made at the beginning of equal periods of time.

 

 

 

141.Compound interest is computed quarterly on $700 for seven years at 12 percent annual interest. The future value table is used by multiplying the $700 by which factor?

 

a.

28 periods at 3 percent

b.

7 periods at 12 percent

c.

28 periods at 7 percent

d.

7 periods at 3 percent

 

 

 

142.The higher the interest rate assumed, the

 

a.

higher the present value of an ordinary annuity.

b.

more one must deposit today to accumulate to a desired sum.

c.

higher the present value of a sum due in the future.

d.

lower the present value of a sum due in the future.

 

 

 

143.Use this information to answer the following question.

 

Periods

Present Value of $1 at 7 Percent

Present Value of Ordinary Annuity of $1 at 7 Percent

1

0.935

0.935

2

0.873

1.808

3

0.816

2.624

 

What amount must be deposited today to grow to $450 in three years?

 

a.

$420.75

b.

$171.49

c.

$331.00

d.

$367.20

 

 

 

144.Use this information to answer the following question.

 

Periods

Present Value of $1 at 7 Percent

Present Value of Ordinary Annuity of $1 at 7 Percent

1

0.935

0.935

2

0.873

1.808

3

0.816

2.624

 

What is the present value of receiving $400 at the end of each year for three years?

 

a.

$326.40

b.

$1,049.60

c.

$1,122.00

d.

$979.20

 

 

 

 

 

 

 

 

145.Use this information to answer the following question.

 

Periods

Present Value of $1 at 7 Percent

Present Value of Ordinary Annuity of $1 at 7 Percent

1

0.935

0.935

2

0.873

1.808

3

0.816

2.624

 

What amount must be deposited today so that $600 may be withdrawn at the end of each year for three years?

 

a.

$1,683.00

b.

$1,574.40

c.

$1,925.14

d.

$1,800.00

 

 

 

146.Use this information to answer the following question.

 

Periods

Present Value of $1 at 7 Percent

Present Value of Ordinary Annuity of $1 at 7 Percent

1

0.935

0.935

2

0.873

1.808

3

0.816

2.624

 

If $100 is invested, how much will it grow to be at the end of the three years?

 

a.

$100 ÷ .816

b.

$100 ? .935 ? 3

c.

($100 ÷ 2.624) ? 3

d.

$100 ? 2.624

 

 

 

147.The FASB has identified all of the following approaches to the measurement of fair value, except

 

a.

the income approach.

b.

the market approach.

c.

the cost approach.

d.

the equity approach.