Google: Time Value of Money and Present Value Essay

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ACCT 2102 Exam 1
“Bright and Early” Saturday Morning, February 9, 2013

Exam begins: 10:00
Exam ends: 12:00

BRING: Picture ID Extra Scantron answersheets SIMPLE CALCULATOR (only) Number 2 pencils

5:30 Class—Where to Meet: Last Names (alphabetically) ROOM (GENERAL CLASSROOM BUILDING) Abate thru Johnson 700 GCB

Jones thru Rhone 300 GCB

Richard thru Underwood 201 GCB

Vanderkleed thru Young 203 GCB
Acct 2102 Midterm 1 Study Guide
Test Format:

* Multiple choice questions (42 @ 6.25 points each). Total possible points are 263. * The extra points are to compensate for any weakness in the main test instrument and misunderstanding in the question wording. * Students need to bring their own scantron. Mark your scantron only when you have selected your FINAL answer: Do not erase! Eraser marks confuse the scantron grading machine. All adverse consequences of eraser marks and mismarks are the student’s responsibility. Bring extra scantrons. * You are permitted to use a simple four-function calculator (cell phones are NOT simple four-function calculators). Instructors/exam proctors will check each student’s calculator while distributing the exams. * This is a closed book, closed note, and closed neighbor exam. You are NOT permitted to have scratch paper. You are NOT to look around during the exam. You are to keep your scantron sheet covered to the extent possible. You must turn in your exam and scantron with your name, your instructor’s name, and the version letter of the exam on both. You will be asked to show a picture id when you turn in your exam and scantron. * You will have 120 minutes to complete the exam. Delays in the timing of the exam can and do occur and you will still be expected to take the exam. * The exam covers Chapters 11 – 12. * Can you work all homework problems and in-class problems without looking at the solutions? This is the main objective of the examination.

Concepts & Skills needed to succeed:

Periodic payments
Compound interest
Simple interest
Present value factors
Future value factors
Present value of annuity factors
Future value of annuity factors
Annual, semi-annual, quarterly, and monthly compounding
Financial leverage
Expected rate of return
Expected return on investment
Rate of return on investment
Time value of money
Cost of capital
Hurdle rate
Borrowing rate
Investment rate
Net present value (NPV)
Discounted cash flow (DCF)
Tax shield
After-tax income
Capital budgeting
Operational investments

1. Understand the difference between simple interest and compound interest and be able to calculate both. 2. Calculate expected investment return based on the probability of various returns. . 3. Calculate the value of a contract by