# Week 5 Check Your Understanding

• ### Question 1 Determine the present values if \$5,000 is received in the future (that is, at the end of each indicated time period) in each of the following situations:

• 5 percent for ten years
 Answers: \$3,070 \$2,070 \$3,170 \$4,070
• ### Question 2 Determine the present values if \$5,000 is received in the future (that is, at the end of each indicated time period) in each of the following situations: 7 percent for seven years.

 Answers: \$2,114 \$4,114 \$3,114 \$1,314
• ### Question 3 Determine the present values if \$5,000 is received in the future (that is, at the end of each indicated time period) in each of the following situations: 9 percent for four years:

 Answers: \$4,542 \$6,542 \$2,542 \$3,542
• ### Question 4 Assume you are planning to invest \$5,000 each year for six years and will earn 10 percent per year. Determine the future value of this annuity if your first \$5,000 is invested at the end of the first year.

 Answers: \$38,470 \$38,578 \$34,578 \$35,878
• ### Question 5 Determine the present value now of an investment of \$3,000 made one year from now and an additional \$3,000 made two years from now, if the annual discount rate is 4 percent.

 Answers: \$5,658.28 \$5,628.19 \$5,638.29 \$5,658.19
• ### Question 6 Assume a bank loan requires an interest payment of \$85 per year and a principal payment of \$1,000 at the end of the loan’s eight-year life. What would be the present value of this loan if it carried an 8.5 percent interest rate?

 Answers: \$1,546 \$1,200 \$1,000 \$1,100
• ### Question 7 Assume a bank loan requires an interest payment of \$85 per year and a principal payment of \$1,000 at the end of the loan’s eight-year life. What would be the present value of this loan if it carried a 10 percent interest rate?

 Answers: \$920 \$820 \$720 \$620
• ### Question 8 Assume a bank loan requires an interest payment of \$85 per year and a principal payment of \$1,000 at the end of the loan’s eight-year life. What would be the present value of the loan if the interest rate is 8 percent?

 Answers: \$1,038 \$1,048 \$1,058 \$1,028