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Financial Accounting Information for Decisions 9Th Ed by John Wild - Test Bank
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,Financial Accounting, 9e (Wild)Appendix B Applying Present and Future Values
1) Interest is the borrower's payment to the owner of an asset, for its use.
Answer: TRUE
Difficulty: 1 Easy
Topic: Present and Future Value Concepts
Learning Objective: B-C1 Describe the earning of interest and the concepts of present and future
values.
Bloom's: Remember
AACSB: Communication
AICPA: BB Industry; FN Measurement
2) From the perspective of an account holder, a savings account is a liability with interest.
Answer: FALSE
Difficulty: 1 Easy
Topic: Present and Future Value Concepts
Learning Objective: B-C1 Describe the earning of interest and the concepts of present and future
values.
Bloom's: Remember
AACSB: Communication
AICPA: BB Industry; FN Measurement
3) An interest rate is also called a discount rate.
Answer: TRUE
Difficulty: 1 Easy
Topic: Present Value of a Single Amount
Learning Objective: B-P1 Apply present value concepts to a single amount by using interest
tables.
Bloom's: Remember
AACSB: Communication
AICPA: BB Industry; FN Measurement
1
Copyright 2019 © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
,4) Present and future value computations enable companies to measure or estimate the interest
component of holding assets or liabilities over time.
Answer: TRUE
Difficulty: 2 Medium
Topic: Present and Future Value Concepts
Learning Objective: B-C1 Describe the earning of interest and the concepts of present and future
values.
Bloom's: Understand
AACSB: Communication
AICPA: BB Industry; FN Measurement
5) The number of periods in a present value calculation may only be expressed in years.
Answer: FALSE
Difficulty: 1 Easy
Topic: Present Value of a Single Amount
Learning Objective: B-P1 Apply present value concepts to a single amount by using interest
tables.
Bloom's: Remember
AACSB: Communication
AICPA: BB Industry; FN Measurement
6) Present Value of 1
Periods 3% 4% 5% 6% 7% 8% 9% 10% 12%
3 0.9151 0.8890 0.8638 0.8396 0.8163 0.7938 0.7722 0.7513 0.7118
4 0.8885 0.8548 0.8227 0.7921 0.7629 0.7350 0.7084 0.6830 0.6355
5 0.8626 0.8219 0.7835 0.7473 0.7130 0.6806 0.6499 0.6209 0.5674
6 0.8375 0.7903 0.7462 0.7050 0.6663 0.6302 0.5963 0.5645 0.5066
7 0.8131 0.7599 0.7107 0.6651 0.6227 0.5835 0.5470 0.5132 0.4523
8 0.7894 0.7307 0.6768 0.6274 0.5820 0.5403 0.5019 0.4665 0.4039
9 0.7664 0.7026 0.6446 0.5919 0.5439 0.5002 0.4604 0.4241 0.3606
10 0.7441 0.6756 0.6139 0.5584 0.5083 0.4632 0.4224 0.3855 0.3220
Future Value of 1
Periods 3% 4% 5% 6% 7% 8% 9% 10% 12%
3 1.0927 1.1249 1.1576 1.1910 1.2250 1.2597 1.2950 1.3310 1.4049
4 1.1255 1.1699 1.2155 1.2625 1.3108 1.3605 1.4116 1.4641 1.5735
5 1.1593 1.2167 1.2763 1.3382 1.4026 1.4693 1.5386 1.6105 1.7623
6 1.1941 1.2653 1.3401 1.4185 1.5007 1.5869 1.6771 1.7716 1.9738
7 1.2299 1.3159 1.4071 1.5036 1.6058 1.7138 1.8280 1.9487 2.2107
8 1.2668 1.3686 1.4775 1.5938 1.7182 1.8509 1.9926 2.1436 2.4760
9 1.3048 1.4233 1.5513 1.6895 1.8385 1.9990 2.1719 2.3579 2.7731
10 1.3439 1.4802 1.6289 1.7908 1.9672 2.1589 2.3674 2.5937 3.1058
2
Copyright 2019 © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
, Present Value of an Annuity of 1
Periods 3% 4% 5% 6% 7% 8% 9% 10% 12%
3 2.8286 2.7751 2.7232 2.6730 2.6243 2.5771 2.5313 2.4869 2.4018
4 3.7171 3.6299 3.5460 3.4651 3.3872 3.3121 3.2397 3.1699 3.0373
5 4.5797 4.4518 4.3295 4.2124 4.1002 3.9927 3.8897 3.7908 3.6048
6 5.4172 5.2421 5.0757 4.9173 4.7665 4.6229 4.4859 4.3553 4.1114
7 6.2303 6.0021 5.7864 5.5824 5.3893 5.2064 5.0330 4.8684 4.5638
8 7.0197 6.7327 6.4632 6.2098 5.9713 5.7466 5.5348 5.3349 4.9676
9 7.7861 7.4353 7.1078 6.8017 6.5152 6.2469 5.9952 5.7950 5.3282
10 8.5302 8.1109 7.7217 7.3601 7.0236 6.7101 6.4177 6.1446 5.6502
Future Value of an Annuity of 1
Periods 3% 4% 5% 6% 7% 8% 9% 10% 12%
3 3.0909 3.1216 3.1525 3.1836 3.2149 3.2464 3.2781 3.3100 3.3744
4 4.1836 4.2465 4.3101 4.3746 4.4399 4.5061 4.5731 4.6410 4.7793
5 5.3091 5.4163 5.5256 5.6371 5.7507 5.8666 5.9847 6.1051 6.3528
6 6.4684 6.6330 6.8019 6.9753 7.1533 7.3359 7.5233 7.7156 8.1152
7 7.6625 7.8983 8.1420 8.3938 8.6540 8.9228 9.2004 9.4872 10.0890
8 8.8923 9.2142 9.5491 9.8975 10.2598 10.6366 11.0285 11.4359 12.2997
9 10.1591 10.5828 11.0266 11.4913 11.9780 12.4876 13.0210 13.5795 14.7757
10 11.4639 12.0061 12.5779 13.1808 13.8164 14.4866 15.1929 15.9374 17.5487
The present value factor for determining the present value of $6,300 to be received three years
from today at 10% interest compounded semiannually is 0.7462. (PV of $1, FV of $1, PVA of
$1, and FVA of $1) (Use appropriate factor(s) from the tables provided.)
Answer: TRUE
Difficulty: 2 Medium
Topic: Present Value of a Single Amount
Learning Objective: B-P1 Apply present value concepts to a single amount by using interest
tables.
Bloom's: Understand
AACSB: Communication
AICPA: BB Industry; FN Measurement
3
Copyright 2019 © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
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