NOTE: For multiple-choice and true/false questions, simply place your cursor over what you think is the correct answer. (There is no need to click the answer.) For fill-in-the-blank questions place your cursor over the _________.
If you have difficulty answering the following questions, learn more about this topic by reading our Explanation of Future Value of a Single Amount.
| 1. |
The amount at a later point in time is known as a ____________ value.
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| 2. |
______________ interest refers to earning interest on previously earned interest.
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| 3. |
The amounts contained in a future value of 1 table for various combinations of n and i are referred to as future value __________.
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| 4. |
In the future value of 1 table, n refers to the number of ____________ of time, such as months, quarters, years.
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| 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.
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| 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%.
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| 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 ____________ _______________.
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| 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 ____________ _______.
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| 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 _____.
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| 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.
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| 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 _____.
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Use the following future value of 1 factors for solving the remaining questions:
Future Value of 1 Factors (FV of 1 factors)
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| n |
1% |
2% |
4% |
8% |
12% |
| 2 |
1.020 |
1.040 |
1.082 |
1.166 |
1.254 |
| 5 |
1.051 |
1.104 |
1.217 |
1.469 |
1.762 |
| 10 |
1.105 |
1.219 |
1.480 |
2.159 |
3.106 |
| 12 |
1.127 |
1.268 |
1.601 |
2.518 |
3.896 |
| 15 |
1.161 |
1.346 |
1.801 |
3.172 |
5.474 |
| 16 |
1.173 |
1.373 |
1.873 |
3.426 |
6.130 |
| 24 |
1.270 |
1.608 |
2.563 |
6.341 |
15.179 |
| 14. |
A deposit of $1,000 on January 1, 2011 will have a future value of $________ on December 31, 2015 (or January 1, 2016) if it is invested at 8% per year and the interest is compounded annually.
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| 15. |
A deposit of $10,000 on January 1, 2011 will have a future value of $________ on December 31, 2015 (or January 1, 2016) if it is invested at 8% per year and the interest is compounded semiannually.
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| 16. |
A deposit of $2,000 on January 1, 2011 will have a future value of $________ on December 31, 2012 (or January 1, 2013) if it is invested at 12% per year and the interest is compounded monthly.
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| 17. |
A deposit of $1,000 on January 1, 2011 will have a future value of $________ on December 31, 2014 (or January 1, 2015) if it is invested at 8% per year and the interest is compounded quarterly.
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| 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.
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| 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.
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| 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.
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