**Present Value of Annuity MCQs**

**Previous Practice: Future Value of Annuity MCQs**

**Next Practice: Special Application of Time Value of Money MCQs**

**MCQs 1-10**

**Click The Option and See Result**

#### 1. The interest rate used in the present value calculation is often referred to as?

Correct!
Wrong!

#### 2. In 2 years you are to receive $10,000. If the interest rate were to suddenly decrease, the present value of that future amount to you would?

Correct!
Wrong!

#### 3. Which of the following is not true regarding an annuity due?

Correct!
Wrong!

#### 4. You are to receive $1,000 every month for 50 months. Your rate of discount is 0.6% per month. What is the present value to you of this cash flow?

Correct!
Wrong!

#### 5. Which one of the following is the procedure of finding out the Present Value (PV)?

Correct!
Wrong!

#### 6. An 8-year annuity due has a present value of $1,000. If the interest rate is 5 percent, the amount of each annuity payment is closest to which of the following?

Correct!
Wrong!

#### 7. What is the present value of a $1,000 ordinary annuity that earns 8% annually for an infinite number of periods?

Correct!
Wrong!

#### 8. The present value of an annuity of $5,000 to be received at the end of each of the next six months for 6 years at a 4% annual rate would be?

Correct!
Wrong!

#### 9. ________ is a series of payments or receipts occurring over a specific number of period, in_________ payments or receipts occur at the end of each period. In___________ Payments or receipts occur at beginning of each period?

Correct!
Wrong!

#### 10. What is the present value of $2,500 semiannual payments received at the beginning of each period for the next 10 years? The APR is 6%?

Correct!
Wrong!

>> Read Present Value of Annuity Table.

**Further Readings**

**References**

Financial Management: Theory and Practice, Dr Eugene F Brigham & C Micheal Ehrhardt

Fundamentals of Financial Management: Concise Edition, Brigham Houston

The Economist Guide to Financial Management, John Tennet

Financial Management: Core Concepts, Raymond M Brooks

## 0 Comments