24 Questions
Which factor determines the future value of a sum of money in a compound interest calculation?
All of the above
In a cash flow diagram, what does a downward-pointing arrow typically represent?
A cash outflow
If you invest $5,000 in a savings account with an annual interest rate of 5% compounded annually, how much money will you have after 3 years?
$5,750
What does the term "discounting" refer to in the context of time value of money?
Finding the present value of future cash flows
What is economic equivalence in the context of financial analysis?
Evaluating the time value of money for cash flows at different points in time
Which of the following represents the future value of a single sum of money?
F=P〖(1+i)〗^N
Economic equivalence allows you to compare:
Investments with different cash flows over time
Which of the following factors make money have time value?
Inflation
If you invest $1,000 at an annual interest rate of 5%, how much will you have after 5 years using simple interest?
$1,250
Which financial metric helps determine the regular payment amount required to repay a loan over a specific period in equal installments?
Annuity
In engineering economics, what is the "principal amount" in the context of a loan repayment plan?
The initial amount borrowed or invested
What is the primary purpose of a repayment plan in engineering economics?
To determine how long it takes to repay a loan or investment
What is the Time Value of Money (TVM) concept primarily concerned with?
Evaluating the worth of money over time
What is the primary purpose of a cash flow diagram in financial analysis?
To visualize the inflows and outflows of cash over time
A graphical representation of cash transactions over time is called
Cash flow diagram
Which financial principle does time value of money rely on?
Compound Interest
If you expect to receive $10,000 in two years, and the discount rate is 8%, what is the present value of that amount?
$8,541.67
In a cash flow diagram, what does an arrow pointing upward typically represent?
Cash inflow
In a cash flow diagram, how is time typically represented on the horizontal axis?
Periods or years
What is compound interest?
Interest calculated on the principal amount and any previously earned interest
There is Project A. If the MARR is 12% per year and the analysis period is 5 years. The capital investment is $50,000, and Annual revenues inus expenses is $20,000. There is no more market value at the end of useful life. What is the PW of the Project A
$22,096
There is Project B. If the MARR is 12% per year and the analysis period is 5 years. The capital investment is $70,000, and Annual revenues minus expenses is $25,000. There is no more market value at the end of useful life. What is the PW of the Project B
$20,119
There is Project C. If the MARR is 12% per year and the analysis period is 5 years. The capital investment is $90,000, and Annual revenues minus expenses is $30,000. There is no more market value at the end of useful life. What is the PW of the Project C
$18,143
There is Project D. If the MARR is 12% per year and the analysis period is 5 years. The capital investment is $110,000, and Annual revenues minus expenses is $35,000. There is no more market value at the end of useful life. What is the PW of the Project D
$16,167
Test your knowledge of compound interest, cash flow diagrams, future value calculations, discounting, and economic equivalence in the context of time value of money. This quiz covers the concepts related to determining the future value of money, understanding cash flow diagrams, calculating future values with compound interest, and terms like 'discounting' and 'economic equivalence.'
Make Your Own Quizzes and Flashcards
Convert your notes into interactive study material.
Get started for free
