Finance Quiz: Investments and Annuities

If you have $15,000 and need $20,000 for a car, and your investment yields 10% annually, approximately how many years will it take to reach your goal?

If you want to buy a house for $150,000 and need a 10% down payment plus 5% of the loan amount for closing costs, how much money do you need in total?

With a $15,000 initial investment and a 7.5% annual return, about how many years will it take to reach the required $21,750 for the down payment and closing costs of a house?

What is the key characteristic of an ordinary annuity?

Which of the following is an example of an annuity due?

What defines a perpetuity in finance?

How do you calculate the present or future value of an annuity due after computing it as if it were an ordinary annuity?

What does the process of discounting primarily determine?

What is the formula to find the present value of a perpetuity where the payment is PMT and the discount rate is r?

If you want to find the present value of $1000 received in 2 years time with an interest rate of 5%, what is the correct calculation?

Assuming the same interest rate, which is true about the relationship between time period and present value?

What tends to happen to the present value of a future sum, as the interest rate increases?

If a future value is $2000 and the present value is $1000, and the interest rate was 10%, what is the number of periods(t)?

What is the 'discounting factor' used for when finding the present value of a future sum?

Which of the following Excel functions can be used to compute present value?

If you need $10,000 in 2 years and can earn 5% annually, what is the present value you need today?

If you deposit $1500,$1000 and $500 at the end of each year for the next 3 years, earning a 6% interest rate, what is the present value of these cash flows?

Using the same cash flows ($1500, $1000 and $500) and interest rate (6%), what is the future value of these investments at the end of 3 years?

What is the combined present value of receiving $1,000 in 7 years and $1,000 in 10 years, assuming a discount rate of 6%?

Which of the following best describes the Annual Percentage Rate (APR)?

How do you calculate the per-period interest rate from the APR?

If you have a credit card with a 1.5% monthly interest rate and a $1,000 balance, approximately how many years will it take to pay off the balance assuming no additional charges?

A loan of $2,000 is taken at a 5% annual interest rate, with annual payments of $734.42. How many years will it take to pay off this loan?

You borrow $10,000 from your parents to purchase a car, agreeing to pay $207.58 per month for 60 months. What is the monthly interest rate on this loan?

Your firm is purchasing a $100,000 warehouse, with the bank requiring a 20% down payment. If the bank offers a 30 year-loan with equal annual payments, what will be the loan amount?

For the warehouse purchase described, if it is a 30-year loan at an 8% annual interest rate, what additional information would be needed to determine the annual loan payment?

If you know the loan amount, the number of monthly payments and the monthly payment amount, which of these can you calculate?

If you know all other parameters, how does increasing the number of payments affect the annual payment amount while keeping the principle constant?

Which function in excel is used to calculate number of periods required to pay off a loan when all other variables are known?

If the account earns 12% per year, how much will Ellen have saved at age 6, assuming she invested $10,000?

In the Future value of Annuity calculation, what does the variable 'i' represent?

In the formula for the future value of an annuity, the variable $n$ usually refers to:

What is the future value of an annuity used to calculate?

What does the variable 'P' stand for in the future value of an ordinary annuity formula?

Using the formula given, if Ellen deposits $20,000 into an account with 7% interest per year, after how many years will she have approximately $6,645 interest earned?

What is the key difference between calculating the future value of a single sum versus the future value of an annuity?

If an investment has a negative interest rate, how will this appear in the standard future value of an annuity formula?

If Ellen makes 3 deposits of $10,000, how many times would the interest earned be compounded in the future value of annuity calculation?

How many deposits are needed to calculate the 'future value of annuity'?

What is the primary distinction between the Annual Percentage Rate (APR) and the Effective Annual Rate (EAR)?

Which of the following best describes the term 'm' as used in the formulas for APR and EAR?

If a loan quotes an APR of 10% compounded monthly, what is the value of m in the EAR formula?

Which of the following actions is explicitly discouraged when calculating the period rate?

How to calculate the Effective Annual Rate (EAR) with the APR and number of periods per year $m$?

How to calculate the Annual Percentage Rate (APR) with the Effective Annual Rate (EAR) and number of periods per year $m$?

In Excel, which function is used to calculate the effective interest rate when provided with the nominal rate and the number of compounding periods per year?

In Excel, which function is used to calculate the nominal interest rate when provided with the effective interest rate and the number of compounding periods per year?

Given an APR of 8% compounded quarterly, which calculation allows you to find the EAR?

If an investment has an Effective Annual Rate of 10%, and interest is compounded monthly, setup the calculation that finds the Annual Percentage Rate (APR).

What is the value of 'npery' in the Excel EFFECT and NOMINAL formulas?

If an investment quotes an APR of 12% compounded semi-annually, what is the value of 'm'?

A loan has an EAR of 7.5%. If the interest is compounded quarterly, what setup would find the APR?

Which rate is typically used for time line visualizations and calculations?

Why should one not divide the effective rate by the number of periods per year?