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A211 Tuotrial Topic 1 Question 1 time value of money review
Advanced Financial Management (BWFF2043)
Universiti Utara Malaysia
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BWFF2043 ADVANCED FINANCIAL MANAGEMENT (A211)
TUTORIAL TOPIC 1: TIME VALUE OF MONEY REVIEWS
- Monica is calculating the present value of a bonus he will receive next year. The process she is applying is called________.
A. growth analysis B. discounting C. accumulating D. compounding
- A(n) ________ is a stream of equal periodic cash flows over an infinite time period.
A. amortized loan B. principal C. perpetuity D. Annual Percentage Yield (APY)
- The interest earned on both the initial principal and the interest from previous period is known as___________.
A. simple interest B. compound interest C. nominal annual rate D. effective annual rate
- The amount of money that would have to be invested today at a given interest rate over a specified period to equal the future amount is called ________.
A. present value B. future value C. present value of annuity D. future value of annuity
- The annual rate of interest actually paid or earned on an investment is called ________.
A. simple interest B. compound interest C. nominal annual rate D. effective annual rate
- If you wish to receive RM5,500 at the end of each year for an infinite period of time, how
much must you deposit today in an account that pays an annual interest rate of 14%?
RM 39285.
- You have a chance to buy an annuity that pays RM1,000 at the end of each year for 5 years. You could earn 6% on your money in other investments with equal risk. What is the most you
should pay for the annuity?
RM 4212.
- When Aisya was born, her parents invested RM7,000 in a savings account paying 8%
interest annually. Her mother also plans to deposit RM1,000 at end of each year starting when
she was born into the same account. How much will be in the savings account on Aisya’s
18th birthday (after the last deposit)?
- Raima is planning to purchase a new proton car at cost of RM50,000. Today she deposited
RM22,500 in a savings account with CIMB Bank. The bank will pay 9% annual interest.
How long will the deposit take to grow to RM50,000?
9 years
- Fui Pin just deposited RM8,500 in a FDR account with HSBC Bank. She is expecting to
receive RM15,980 at the end of 6 years from the account. What is the required rate of return
per year on this investment?
11%
A211 Tuotrial Topic 1 Question 1 time value of money review
Course: Advanced Financial Management (BWFF2043)
University: Universiti Utara Malaysia
