Free Financial Mathematics Time Value of Money Questions and Answers

Question 1

If you invest $2,000 today at an annual interest rate of 6%, compounded annually, what will the investment be worth in 4 years?

Accepted Answer

$2,673.84

Answer

$2,500.00

Answer

$2,744.00

Answer

$2,800.00

Question 2

What is the present value of $8,000 to be received 6 years from now, with a discount rate of 7% annually?

Accepted Answer

$5,394.94

Answer

$5,322.00

Answer

$5,440.00

Answer

$5,500.00

Question 3

You borrow $15,000 to be repaid over 5 years with an annual interest rate of 9%, compounded annually. What is the annual payment?

Accepted Answer

Answer

$3,856.63

Answer

$3,877.20

Answer

$3,800.00

Answer

$3,900.00

Question 4

If a perpetuity pays $1,000 annually and the discount rate is 5%, what is the value of the perpetuity?

Accepted Answer

$20,000.00

Answer

$15,000.00

Answer

$18,000.00

Answer

$25,000.00

Question 5

What is the future value of an annuity that pays $2,000 annually for 10 years at an interest rate of 8%?

Accepted Answer

$28,973.00

Answer

$29,324.00

Answer

$28,924.50

Answer

$30,000.00