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Test Bank For Financial Accounting 6th Edition By Spiceland, Thomas, Herrmann
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Test Bank For Financial Accounting 6th Edition By Spiceland, Thomas, Herrmann
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,APPENDIX C: PROBLEM MATERIALESSAY. Write your answer in the space provided or on a separate sheet of paper.
1) Listed below are ten terms followed by a list of phrases that describe or characterize five
of the terms. Match each phrase with the best term placing the letter designating the term in the
space provided.
Terms:
a. Annuity
b. Future value of a single amount
c. Discount rate
d. Future value of an annuity
e. Interest
f. Compound interest
g. Present value of a single amount
h. Time value of money
i. Simple interest
j. Present value of an annuity
Phrases:
_____ A dollar now is worth more than a dollar later.
_____ Cash payments of equal amounts over time periods of equal length.
_____ Accumulation of a series of equal payments.
_____ Interest earned on the initial investment and on previous interest.
_____ Accumulation of an amount with interest.
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,2) Listed below are ten terms followed by a list of phrases that describe or characterize five
of the terms. Match each phrase with the best term placing the letter designating the term in the
space provided.
Terms:
a. Annuity
b. Future value of a single amount
c. Discount rate
d. Future value of an annuity
e. Interest
f. Compound interest
g. Present value of a single amount
h. Simple interest
i. Present value of an annuity
Phrases:
_____ Amount today equivalent to a specified future amount.
_____ The rate at which future dollars are equal to current dollars.
_____ Interest earned on the initial investment only.
_____ The factor that causes money today to be worth more than the same amount in the future.
_____ Current worth of a series of equal payments received in the future.
3) Compute the future value of the following invested amounts at the specified periods and
interest rates:
Item Invested Interest Rate Number of
Amount Periods
a. $27,000 9% 11
b. $37,000 6% 5
c. $17,000 11% 16
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, 4) Compute the future value of the following invested amounts at the specified periods and
interest rates:
Item Invested Interest Rate Number of
Amount Periods
a. $20,000 8% 10
b. $30,000 4% 8
c. $10,000 12% 15
5) Anthony would like to have $18,000 to buy a new car in three years. Currently, he has
saved $15,000. If he puts $15,000 in an account that earns 6% interest, compounded annually,
will he be able to buy the car in three years?
6) Michaela would like to have $10,000 for a European vacation in four years. Currently,
she has saved $8,000. If she puts $8,000 in an account that earns 6% interest, compounded
annually, will she be able to take the vacation in four years?
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