# Liberty BUSI 320 Chapter 9 Reading Assignment Answers Complete Solutions

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The factors needed to compute the interest rate on an annuity are:

Expressed in graphical form, the line showing the future value will if the number of periods increase.

Expressed in graphical form, the bars showing the present value will if the number of periods increase.

If all other factors remain the same, an increase in the number of periods will the future value of an investment.

An investment of $2,000 pays 8% interest, how many periods will it take for the investment to have a value of $2,662?

$1,000 invested today will be worth $1,330 three years from today. What is the interest rate? Round to the nearest whole percentage.

You have $500,000 when you retire. What withdrawal can you make at the end of each of the next 20 years, assuming a 6% interest rate?

## STATUS

For semiannual compounding of a future value, the years are multiplied by 2 and the annual interest rate is divided by 2.

The two variables that determine the interest factor in a TVM table are the number of periods and the future value.

An increase in the discount rate would the present value of an annuity.

Which of the following are core concepts related to the time value of money?

$1,000 invested today will be worth $1,100 one year from today. What is the interest rate? Round to the nearest whole percentage.

Calculate the future value of a lump sum of $1,000 invested for 4 years at 10%, using compounded quarterly.

The discount rate is the interest rate used to calculate the time value of money.

The factors needed to compute the interest rates are:

The factors that needed to compute the number of periods are:

For annuity, and increase in the number periods will ______ the present value.

The future value of an amount is directly proportional to the interest rate.

If an investment of $2,000 dollars pays 10% interest, how many periods will it take for the investment to have a value of $2,662?

The present value of an annuity is the value of a series of equal payments to be received in the future

The present value of money received today is _______ the same amount of money that will be received a year from today.

To find the present value of a series of equal payments, what’s table or procedure would you use?

When using the time values to table, the interest factor that is looked up (i.e., PVIF, PFIVA, FVIF, FVIFA) is then ______ the dollar amount of the known variable (PV, PMT, or FV).

Which of the following correctly contrasts and and ordinary annuity and an annuity date?

You have want a small lottery of $1,000,000. However, instead of a lump sum amount, the lottery will pay you $50,000 dollars per year for 20 years (Total of $1 million.) If interest is 4%, what is the present value of your winnings, assuming payments are received at the end of each year? (Note: ignore inflation and taxes)

You plan to invest $2,000 dollars per year for 10 years into an IRA. What was the value of the IRA be at the end of the 10 years if the interest rate is 4% per year? Your answer may vary due to rounding.