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Chapter 6 Investment Test Questions

This document contains 6 multiple choice questions testing concepts related to compound interest, present value, and future value of investments. Each question provides a scenario where a company is making investments over a period of years at a 12% interest rate. The questions ask to calculate the amount in the investment fund at a future date based on the annual deposits and accumulated interest over time.

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8 views2 pages

Chapter 6 Investment Test Questions

This document contains 6 multiple choice questions testing concepts related to compound interest, present value, and future value of investments. Each question provides a scenario where a company is making investments over a period of years at a 12% interest rate. The questions ask to calculate the amount in the investment fund at a future date based on the annual deposits and accumulated interest over time.

Uploaded by

Michelle
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd

Chapter 6 Test Prep Multiple Choice

Tipson Corporation will invest $10,000 every January 1st for the next six years
(2010 - 2015). If Linton will earn 12% on the investment, what amount will be in the
investment fund on December 31, 2015?
a. $41,114
b. $46,048.
c. $81,152.
d. $90,890.
Answer: d

Hiller Corporation makes an investment today (January 1, 2010). They will receive
$20,000 every December 31st for the next six years (2010 - 2015). If Hiller wants to
earn 12% on the investment, what is the most they should invest on January 1,
2010?
a. $82,228.
b. $92,096.
c. $162,304.
d. $181,780.
Answer: a

Sonata Corporation will receive $20,000 today (January 1, 2010), and also on each
January 1st for the next five years (2011 - 2015). What is the present value of the
six $20,000 receipts, assuming a 12% interest rate?
a. $82,228.
b. $92,096.
c. $162,304.
d. $181,780.
Answer: b

Renfro Corporation will invest $30,000 every December 31st for the next six years
(2010 - 2015). If Renfro will earn 12% on the investment, what amount will be in the
investment fund on December 31, 2015?
a. $123,342
b. $138,144.
c. $243,456.
d. $272,670.
Answer: c

Vannoy Corporation will invest $25,000 every January 1st for the next six years
(2010 - 2015). If Wagner will earn 12% on the investment, what amount will be in
the investment fund on December 31, 2015?
a. $102,785.
b. $115,120.
c. $202,880.
d. $227,225.
Answer: d

On January 1, 2010, Kline Company decided to begin accumulating a fund for asset
replacement five years later. The company plans to make five annual deposits of
$50,000 at 9% each January 1 beginning in 2010. What will be the balance in the
fund, within $10, on January 1, 2015 (one year after the last deposit)? The following
9% interest factors may be used.
Present Value of Future Value of
Ordinary Annuity Ordinary Annuity
4 periods 3.2397 4.5731
5 periods 3.8897 5.9847
6 periods 4.4859 7.5233
a. $326,166
b. $299,235
c. $272,500
d. $250,000
Answer: a

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