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Please circle the answer the following questions:

1. You are investing $100 today in a savings account at your local bank. Which one of the following terms refers to the value of this investment six months from now?

A. Future Value

B. Simple Interest

C. Dual Interest

D. Compound Interest

2. Interest earned on both the initial principal and the interest reinvested from prior periods is called:

A. Future Value

B. Simple Interest

C. Dual Interest

D. Compound Interest

3. Cindy won a lottery and will receive $1,000 a week for the next 40 years. The value of her winnings

today discounted at her discount rate is called?

A. Present Value

B. Simple Amount

C. Future Value

D. Compounded Annuity

4. The process of determining the present value of future cash flows in order to know their worth today is referred to as:

A. Discounted cash flow

B. Amortization

C. Compound Interest

D. Factoring

5. Your grandfather has promised to give you $50,000 when you graduate from college. He is expecting

you to graduate three years from now. What happens to the present value of this gift if you graduate

early, in two years?

A. Increases

B. Decreases

C. Remains Constant

D. Decreases by

6. Which one of the following will produce the highest present value interest factor?

A. 9% interest for 10 years

B. 9% interest for 5 years

C. 7% interest for 10 years

D. 7% interest for 5 years

7. Which of these will decrease the present value of an amount to be received sometime in the future?

A. Decrease in the interest rate.

B. Increase in the interest rate.

C. Increase the number of periods (t).

D. Cannot be determined with information provided.

8. Which statement is true?

A. For a given interest rate, the longer the time period, the lower the present value

B. For a given interest rate, the shorter the time period, the lower the present value

9. Which statement is false?

A. For a given time period, the higher the interest rate, the smaller the present value

B. For a given time period. the lower the interest rate, the smaller the present value

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