Andy deposited $3,000 this morning into an account that pays 5 percent interest, compounded annually

The process of determining the present value of future cash flows in order to know their worth today is called which one of the following?    A.  compound interest valuation B.  interest on interest computation C.  discounted cash flow valuation D.  present value interest factoring E.  complex factoring

10.

Andy deposited $3,000 this morning into an account that pays 5 percent interest, compounded annually. Barb also deposited $3,000 this morning into an account that pays 5 percent interest, compounded annually. Andy will withdraw his interest earnings and spend it as soon as possible. Barb will reinvest her interest earnings into her account. Given this, which one of the following statements is true?    A.  Barb will earn more interest the first year than Andy will. B.  Andy will earn more interest in year three than Barb will. C.  Barb will earn interest on interest. D.  After five years, Andy and Barb will both have earned the same amount of interest. E.  Andy will earn compound interest.

11.

Sue and Neal are twins. Sue invests $5,000 at 7 percent when she is 25 years old. Neal invests $5,000 at 7 percent when he is 30 years old. Both investments compound interest annually. Both Sue and Neal retire at age 60. Which one of the following statements is correct assuming that neither Sue nor Neal has withdrawn any money from their accounts?    A.  Sue will have less money when she retires than Neal. B.  Neal will earn more interest on interest than Sue. C.  Neal will earn more compound interest than Sue. D.  If both Sue and Neal wait to age 70 to retire, then they will have equal amounts of savings. E.  Sue will have more money than Neal as long as they retire at the same time.

12.

Samantha opened a savings account this morning. Her money will earn 5 percent interest, compounded annually. After five years, her savings account will be worth $5,600. Assume she will not make any withdrawals. Given this, which one of the following statements is true?    A.  Samantha deposited more than $5,600 this morning. B.  The present value of Samantha's account is $5,600. C.  Samantha could have deposited less money and still had $5,600 in five years if she could have earned 5.5 percent interest. D.  Samantha would have had to deposit more money to have $5,600 in five years if she could have earned 6 percent interest. E.  Samantha will earn an equal amount of interest every year for the next five years.