1. Foundations of Finance
Time Value — Quiz
Test your understanding of time value with 5 practice questions.
Practice Questions
Question 1
What is the present value of a continuous payment stream of \$500 per year for 3 years at a continuous interest rate of 6%?
Question 2
What is the effective annual rate (EAR) if the nominal annual interest rate is 7% compounded daily?
Question 3
To accumulate \20{,}000 in 10 years at 5% annual interest compounded semi-annually, how much must be deposited today?
Question 4
An investor makes deposits of \$1{,}000 at t=0 and \$2{,}000 at t=2 years into an account earning 4% annually. What is the future value at t=5 years?
Question 5
What is the present value of a 5-year annuity with first payment \$100 at t=1, growing at 3% per year, discounted at 8% annually?