Appendix F Chapter 10-11, 7, 12

Question 1

Simple Interest - Calculating Interest

Answer 1

Interest = Principal (p) * Rate (i) * Time (n)

Question 2

Future Value of a SINGLE Amount

Answer 2

Table 1

Question 3

Factor to calculate Future Value of a SINGLE Amount

Answer 3

Present Value (Amount initially invested) * Factor (from Table 1) = Future Value (will ALWAYS be larger than Present Value)

Question 4

Future Value of Annuity

Answer 4

Table 2

Question 5

Factor to calculate Future Value of ANNUITY

Answer 5

Payment (Periodic Payment Amount) * Factor (from Table 2) = Future Value (will ALWAYS be larger than present value)

Question 6

Present Value of a SINGLE Amount

Answer 6

Table 3

Question 7

Factor to calculate Present Value of a SINGLE Amount

Answer 7

Future Value (Future Amount to be received) * Factor from Table 3 = Present Value (Will ALWAYS be smaller than Future Value)

Question 8

Present Value of ANNUITY

Answer 8

Table

Question 9

Factor to calculate Present Value of ANNUITY

Answer 9

Future receipts per period * Factor from Table 4 = Present Value (Will ALWAYS be smaller future annual receipts * n)

Question 10

How do you calculate factor from any needed table?

Answer 10

Time/Periods (n) * Rate
(Number on left of table * Percentage on top of table)

Question 11

Computing Present Value

Answer 11

• Dollar amount to be received (future amount)
• Annual interest rate (the discount rate)
• Length of time until amount is received (number of periods)

Question 12

Computing Future Value of an Annuity

Answer 12

• Dollar amount of the period payments or receipts
• Annual interest rate
• Number of compounding periods

Question 13

Computing Present Value of an Annuity

Answer 13

• Amount of the periodic payments receipts
• Annual interest rate (Discount rate)
• Number of periodic payments or receipts

Question 14

Time Periods & Discounting - Semiannually

Answer 14

• Annual Rate/ 2 Semiannual Periods
• Numbers of years * 2 semiannual periods

Question 15

Time periods & Discounting - Monthly

Answer 15

Annual rate / 12 months
Number of years * 12 months