1. Foundations

Time Value — Quiz

Test your understanding of time value with 5 practice questions.

Practice Questions

Question 1

What nominal annual interest rate compounded monthly is equivalent to an effective annual rate of 10%?

Question 2

What is the present value at $t=0$ of an annuity paying \\$5{,}000 each year from $t=4$ to $t=8 inclusive, at a discount rate of 8%?

Question 3

How many years $t$ are required for \\$1{,}000 to grow to \\$2{,}500 at 6% annual interest compounded quarterly?

Question 4

A project's cash flows are \\$5,000 at end of Year 1, \\$7,000 at Year 2, and \\9,000 at Year 3; initial cost is \\$20,000. At 9% discount rate, what is the NPV?

Question 5

Which statement is correct when comparing \\5{,}000 invested for 10 years at 5% compounding annually versus semiannually?