Multiple Choice Questions

1. A manufacturer of toilet flush valves wants to have $1,900,000 available 3 years from now so that a new product line can be initiated. If the company plans to deposit money each year, starting now, the equation that represents the deposit each year at 8% per year interest is:

(a) 1,900,000(A/F, 8%, 3)

(b) 1,900,000(A/F, 8%, 4)

(c) 1,900,000 + 1,900,000(A/F, 8%, 3)

(d) 1,900,000 + 1,900,000(A/F, 8%, 2)

2. The present worth in year 0 of a lease that requires a payment of $9000 now and amounts increasing by 5% per year through year 10 at 8% per year interest is closest to:

(a) $73,652

(b) $79,939

(c) $86,335

(d) Over $87,000

3. For the diagram shown, the respective values of n for the following equation are:

P0 = 100(P/A, 10%, n) (P/F, 10%, n)

(a) 6 and 1

(b) 6 and 2

(c) 7 and 1

(d) 7 and 2

4. Summit Metals is planning to expand its Wichita, Kansas, manufacturing operation 5 years from now at a cost of $10,000,000. If the company plans to deposit money into an account each year for 4 years beginning 2 years from now (first deposit is in year 2) to pay for the expansion, the equation that represents the amount of the deposit at 9% per year interest is:
(a) A = 10,000,000(A/F, 9%, 5)
(b) A = 10,000,000(A/F, 9%, 4)
(c) A = 10,000,000(A/P, 9%, 4)
(d) A = 10,000,000(A/F, 9%, 4)(P/F, 9%,1)

Transcribed Image Text:

|-10% per year 0 2 3 45 6 Year $100 $100 $100 S100 $100 $100