Nature of Interest
Calculations
Present Value Concepts
Financial Calculators
Bonus
100
Payment for the use of another person's money
What is interest?
100
Suppose you have a winning lottery ticket and the state gives you the option of taking $10,000 three years from now or taking the present value of $10,000 now. The state uses an 8% rate in discounting. This is the amount more or less will you receive if you accept your winnings now.
What is you would receive $22,464 more if you waited to accept your earnings?
100
It is necessary to know the interest rate, number of compounding periods and the amount of periodic payments or receipts to calculate this.
What is the future value of an annuity?
100
This is how many decimal places the calculator uses during calculations
What are 12 decimal places?
100
What is the formula for present value?
A: PV = FV/(1+i)^n
200
Interest computed on principal amount and on any interest earned that has not been paid or withdrawn.
What is compound interest?
200
If principle = $1,000 and discount rate = 10%, how much interest can the shareholder receive each time?
A: $50
200
Discounting the future amount is referred to as the process for this.
What is determining the present value?
200
These offset in the financial calculator
What are positive and negative cash flows?
200
(Net cash provided by operating activities)/(Average current liabilities)
What is the liquidity equation for current cash debt coverage?
300
Calculated by multiplying Principal * Interest Rate * Time
What is simple interest?
300
If you borrowed $4,000 for 18 months (1.5 years) at a simple interest rate of 15% annually, how much would you pay in total interest?
What is $900
300
Using Present value = Future value/ (1+i)^n, this is the amount of money you need to invest today if you want to have $1000 in 5 years and a 10% rate of return.
What is $620.92?
300
The two types of loans with which you can use a financial calculator
What are auto loans and mortgage loans?
300
The inventory cost flow method companies usually adopt
What is it depends on three factors: income statement effects, balance sheet effects, and tax effects?
400
1. The interest rate 2. The number of compounding periods 3. The amount of periodic payments or receipts
What are the 3 factors to know when computing the future value of an annuity?
400
how to calculate the present value in annuity using the present value table?
A: find the present value table at % for n years and PV= future value* present value factor.
400
Using Present value = Future value/ (1+i)^n, calculate the amount of money you need to invest today if you want to have $1000 in 5 years and a 10% rate of return.
What is $10,775.325?
400
This is how many times a year the default setting assumes compounds
What is 12 times a year?
400
The steps necessary to determine the cost of goods sold under a periodic inventory system.
What is 1. Determine the cost of goods on hand at the beginning of the accounting period 2. Add to it the cost of goods purchased. 3. Subtract the cost of goods on hand at the end of the accounting period.
500
FV=p*(1+i) n
What is the formula used when calculating the future value of an annuity?
500
What is the future value of a $2,000 investment at 9% earned interest rate for three years?
Answer:2590.06
500
Loans or Lease Rental Contracts are some examples of these.
What are annuities?
500
The five most common used keys, abbreviated N I PV PMT FV
What is N: number of periods I: interest rate per period PV: present value PMT: payment FV: future value?
500
The difference in interest accumulated after three years, beginning with $500, at an interest rate of 5%, between simple and compound interest (compounded yearly).
What is $3.81? Simple interest accumulated: $75.00 Compound interest accumulated: $78.81
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