Test your knowledge across all finance topics
Time Value of Money
PV, FV, annuities, perpetuities
Bond Valuation
Pricing, YTM, interest rate risk
Stock Valuation
DGM, growth models, nonconstant growth
Capital Budgeting
Payback, NPV, PI, project evaluation
1. The time value of money concept states that:
Answer: b) Money received today is worth more than the same amount received in the future
1. _____ The future value of a single amount increases as the interest rate increases.
Answer: True
Time Value of Money (10 points)
If you deposit $5,000 today in an account that pays 6% annual interest, how much will you have in the account after 10 years?
Solution:
FV = PV × (1 + r)ⁿ = $5,000 × (1.06)¹⁰ = $5,000 × 1.7908 = $8,954.24
Time Value of Money is the foundation for all other topics
Work through all practice problems on each topic page
Know when and how to apply each formula
The exam is 2 hours - pace yourself accordingly
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