• Check My Work (2 remaining)

One can determine the amount of an annuity payment by knowing

a. the four other variables (N, I, FV, and PV) of the annuity.

b. two of the other variables.

c. the interest rate and the PV.

d. the interest rate and the FV.

e. one of the other variables of the annuity.

Solving for the N value is helpful

a. to determine how long it will take to accumulate a desired sum of money.

b. to know how much interest will be earned in a certain number of years.

c. when determining if an interest rate is simple or compounded.

d. when trying to find the future value of a cash flow.

e. if you want to use algebra to find the time value of money.

• Check My Work (1 remaining)

To find the present value (PV) of an ordinary annuity,

a. the interest is compounded and then subtracted from the FV.

b. each payment is divided by

c. each payment is multiplied by

d. the future value (FV) is divided by the interest rate.

• Check My Work (2 remaining)

Which of the following would constitute an ordinary annuity?

a. A trust fund that pays $900 per month for a period of 180 months

b. A CD that pays 2% interest compounded over 10 years

c. A savings account that earns 0.5% interest

d. A mortgage with an adjustable interest rate and variable payments

e. A loan with payments required at the beginning of each year

• Check My Work (2 remaining)

In order to determine the interest rate of a cash flow, you must know

a. the periodic rate of return.

b. the number of periods and the future value.

c. the number of periods and the present value.

d. the present value, the future value, and the number of periods.

e. the future value and the present value.

• Check My Work (2 remaining)

Which of the following statements is CORRECT about an amortized loan?

a. The payments get smaller toward the end of the loan's life.

b. The principal portion of the payments generally decreases over time.

c. The interest rates are always higher near the end of the amortization schedule.

d. The interest portion of the payments generally decreases over time.

e. Payments are always made annually.

e. the future value is divided by