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 __________
future value.

2.

__________
Compound (or Compounded) 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 __________
factors.

4.

In the future value of 1 table, **n** refers to the number of __________
periods 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 __________
present 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 __________
16 (4 years X 4 quarters per year) 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 __________
interest revenue (or interest income).

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 __________.

at the end of 3 years

during the 3 years

Under the accrual basis of accounting, revenues should be reported when they are earned. In this case, the interest revenue is earned in each of the three years.

when deposit is made

9.

Which compounding of an 8% annual interest rate will result in a larger future value?

2% per quarter

This will provide more future value because interest will be earned on interest after three months (instead of one year).

8% per year

Interest will not be earning interest until after one year, whereas quarterly compounding will allow interest to be earned on interest after three months.

No difference

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 __________
interest rate.

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 __________
5% (10% per year divided by 2 six-month periods per year).

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 __________
24 (2 years X 12 months per year) 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 __________
1% (12% divided by 12 months per year).

14.

A deposit of $1,000 on January 1, 2024 will have a future value of $__________
**$1,469**.

FV of 1 = PV x FV of 1 factor for n = 5 years, i = 8% compounded annually

FV of 1 = $1,000 x 1.469

FV of 1 =__$1, 469__ on December 31, 2028 (or January 1, 2029) if it is invested at 8% per year and the interest is compounded annually.

FV of 1 = PV x FV of 1 factor for n = 5 years, i = 8% compounded annually

FV of 1 = $1,000 x 1.469

FV of 1 =

15.

A deposit of $10,000 on January 1, 2024 will have a future value of $__________
**$14,800**.

FV of 1 = PV x FV of 1 factor for n = 10 semiannual periods, i = 4% per semiannual period

FV of 1 = $10,000 x 1.480

FV of 1 =__$14,800__ on December 31, 2028 (or January 1, 2029) if it is invested at 8% per year and the interest is compounded semiannually.

FV of 1 = PV x FV of 1 factor for n = 10 semiannual periods, i = 4% per semiannual period

FV of 1 = $10,000 x 1.480

FV of 1 =

16.

A deposit of $2,000 on January 1, 2024 will have a future value of $__________
**$2,540**.

FV of 1 = PV x FV of 1 factor for n = 24 months, i = 1% per month

FV of 1 = $2,000 x 1.270

FV of 1 =__$2,540__ on December 31, 2025 (or January 1, 2026) if it is invested at 12% per year and the interest is compounded monthly.

FV of 1 = PV x FV of 1 factor for n = 24 months, i = 1% per month

FV of 1 = $2,000 x 1.270

FV of 1 =

17.

A deposit of $1,000 on January 1, 2024 will have a future value of $__________
**$1,373**.

FV of 1 = PV x FV of 1 factor for n = 16 quarters, i = 2% per quarter

FV of 1 = $1,000 x 1.373

FV of 1 =__$1,373__ on December 31, 2027 (or January 1, 2028) if it is invested at 8% per year and the interest is compounded quarterly.

FV of 1 = PV x FV of 1 factor for n = 16 quarters, i = 2% per quarter

FV of 1 = $1,000 x 1.373

FV of 1 =

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 __________
**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%**.% per year.

FV of 1 = PV x FV of 1 factor for n = 15 years,

$5,474 = $1,000 x FV of 1 factor for n = 15 yrs,

5.474 = FV of 1 factor for n = 15 yrs, i = ??% compounded yearly;

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 __________
**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.**% per year.

FV of 1 = PV x FV of 1 factor for n = 16 quarters,

$1,373 = $1,000 x FV of 1 factor for n = 16 qtrs,

1.373 = FV of 1 factor for n = 16 qtrs,

Look only in the row, n = 16, and locate the factor 1.373. It is in the column where i = 2%. This means that

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 __________
**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**. years.

FV of 1 = PV x FV of 1 factor for

$2,563 = $1,000 x FV of 1 factor for

Look only in the column, i = 4%, and locate the factor 2.563. It is in the row where n = 24. This means that

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