More ways to study this topic:

Print this topic (PDF)

when you join PRO.

For multiple-choice and true/false questions, simply press or click on what you think is the correct answer. For fill-in-the-blank questions press or click on the blank space provided.

If you have difficulty answering the following questions, learn more about this topic by reading our Future Value of a Single Amount (Explanation).

- 1. The amount at a later point in time is known as a value.
- 2. interest refers to earning interest on previously earned interest.
- 3. The amounts contained in a future value of 1 table for various combinations of n and i are referred to as future value .
- 4. In the future value of 1 table, n refers to the number of of time, such as months, quarters, years.
- 5. If you know the future value of a single deposit, the interest rate, and the number of periods that the interest is compounded, you will be able to calculate the value by using a future value of 1 table.
- 6. Assume that you are calculating the future value of a single deposit by using a future value of 1 table. The deposit will be invested in an account earning 12% per year for four years. If the interest will be compounded quarterly, the number of periods (n) will be and i will be 3%.
- 7. An unrestricted deposit of $1,000 grows to a future value of $5,000 through the compounding of interest. Under the accrual basis of accounting, the $4,000 of growth should be reported as .
- 8.
Under the accrual basis of accounting, the interest earned over a three-year period on a single deposit should be reported on a company's income statement

During The 3 Years - 9.
Which compounding of an 8% annual interest rate will result in a larger future value?

2% Per Quarter8% Per Year - 10. If you know the present value of a single amount, the future value of that amount, and the number of periods that the interest will be compounded, you can calculate the .
- 11. When using the future value of 1 table to calculate the future value of a deposit earning 10% per year compounded semiannually, you would use a factor from the column headed .
- 12.
An account or deposit will earn 12% interest per year for two years. Assuming that you are using the future value of 1 table and the interest is compounded monthly, you will find the factor in the
**row**where**n**is periods. - 13.
An account or deposit will earn 12% interest per year for two years. Assuming that you are using the future value of 1 table and that the interest is compounded monthly, you will find the factor in the
**column**where**i**is . -
**Use the following future value of 1 factors for solving the remaining questions:**

- 14. A deposit of $1,000 on January 1, 2016 will have a future value of $ on December 31, 2020 (or January 1, 2021) if it is invested at 8% per year and the interest is compounded annually.
- 15. A deposit of $10,000 on January 1, 2016 will have a future value of $ on December 31, 2020 (or January 1, 2021) if it is invested at 8% per year and the interest is compounded semiannually.
- 16. A deposit of $2,000 on January 1, 2016 will have a future value of $ on December 31, 2017 (or January 1, 2018) if it is invested at 12% per year and the interest is compounded monthly.
- 17. A deposit of $1,000 on January 1, 2016 will have a future value of $ on December 31, 2019 (or January 1, 2020) if it is invested at 8% per year and the interest is compounded quarterly.
- 18.
The interest rate that is necessary for a deposit of $1,000 to grow to $5,474 after 15 years of interest compounded annually is __________% per year.
**12%**.

FV of 1 = PV x FV of 1 factor for n = 15 years,**i = ??%**compounded yearly;

$5,474 = $1,000 x FV of 1 factor for n = 15 yrs,**i = ??%**compounded yearly;

5.474 = FV of 1 factor for n = 15 yrs, i = ??% compounded yearly;**Look only in the row, n = 15, and locate the factor 5.474. It is in the column where i = 12%**. - 19.
The annual interest rate that is necessary for a deposit of $1,000 to grow to $1,373 after four years of interest compounded quarterly is __________% per year.
**8%**.

FV of 1 = PV x FV of 1 factor for n = 16 quarters,**i = ??% per quarter**;

$1,373 = $1,000 x FV of 1 factor for n = 16 qtrs,**i = ??% per quarter**;

1.373 = FV of 1 factor for n = 16 qtrs,**i = ??% per quarter**;

Look only in the row, n = 16, and locate the factor 1.373. It is in the column where i = 2%. This means that**the rate per quarter is 2%. Since the question is asking for the annual rate, multiply the rate per quarter times 4 to arrive at 8% per year.** - 20.
The number of years required for an investment of $1,000 to grow to $2,563 when invested at an annual rate of 8% compounded semiannually is __________years.
**12 years**.

FV of 1 = PV x FV of 1 factor for**n = ?? six-month periods**, i = 4% semiannually;

$2,563 = $1,000 x FV of 1 factor for**n = ?? six-month periods**, i = 4% semiannually;**2.563**= FV of 1 factor for**n = ?? six-month periods**, i = 4% semiannually;

Look only in the column, i = 4%, and locate the factor 2.563. It is in the row where n = 24. This means that**the number of six-month periods is 24, and that equals 12 years**.

More ways to study this topic:

Studies show that exam questions are a great way to learn and retain important information. Gain access to our **1,700 accounting exam questions** (and answers) when you upgrade to PRO.