Deck 9: Working With Financial Tools and Functions

Question 1

You should reference worksheet cells in which the values are entered so the values are easily visible.

Answer 1

True

Question 2

The list of values in the IRR function must include at least one positive cash flow and one negative cash flow.

Answer 2

True

Question 3

You can calculate cumulative payments on interest and principal using the CUMIPMT and CUMPRINC functions.

Answer 3

True

Question 4

The NPER function returns the number of payment periods,not necessarily the number of years.

Question 5

An error indicator (a red triangle in the upper-left corner of a cell)flags cells with an error or a potential error.

Question 6

The fv argument is required in the PMT function.

Question 7

If you are making periodic monthly payments,and the interest is compounded monthly,then the number of periods is in years.

Question 8

To calculate a declining balance depreciation,use the DVB function.

Question 9

To properly use financial functions,always place argument values directly into a financial formula.

Question 10

Error values will propagate throughout a workbook.

Question 11

If the NPER function returns #NUM!,the loan cannot be repaid in any length of time.

Question 12

The functions used to work with loans are the same ones you used to work with investments;the only difference is the direction of the cash flow.

Question 13

The major advantage of the payback period is that it takes into account the time value of money.

Question 14

As shown in the accompanying figure,earlier payment periods apply more of the payment toward the principal.

Question 15

Assets such as raw materials a company uses to manufacture cars are considered tangible assets.

Question 16

Cash flow is not concerned with the direction of the money as it moves in and out of the company.

Question 17

Both the NPV and the IRR functions assume the cash flows occur at evenly spaced intervals.

Question 18

Cash flow has nothing to do with who owns the money.

Question 19

In an amortization schedule,use relative references to refer to the original loan conditions and use absolute references to refer to information about specific payment periods.

Question 20

The financial definition of net present value is the difference between the present value of future cash flows and the current cost of the initial investment.

Question 21

A regular cash flow occurs when cash is going away from the investor._________________________

Question 22

MATCHING
Identify the letter of the choice that best matches the phrase or definition.
a.PPMT function
g.PMT function
b.rate of return
h.XIRR function
c.IPMT function
i.NPV
d.IRR
j.NPER function
e.NPV function
k.FV function
f.RATE function
l.PV function
Calculates the amount of a loan payment used to pay off the interest

Question 23

When using the PMT function to calculate monthly loan payments,the interest rate and the number of payments should be based on the interest rate per year and the total months to pay off the loan._________________________

Question 24

The financial functions automatically format calculated values as currency with negative cash flow appearing in a green font._________________________

Question 25

At higher rates of return,the net present value of the investment goes up._________________________

Question 26

The function DDB is used to calculate a declining balance depreciation._________________________

Question 27

MATCHING
Identify the letter of the choice that best matches the phrase or definition.
a.PPMT function
g.PMT function
b.rate of return
h.XIRR function
c.IPMT function
i.NPV
d.IRR
j.NPER function
e.NPV function
k.FV function
f.RATE function
l.PV function
Calculates the amount of a loan payment applied to the principal

Question 28

With the FV function,if the amount invested each month is -30,000,this represents a positive cash flow._________________________

Question 29

MATCHING
Identify the letter of the choice that best matches the phrase or definition.
a.PPMT function
g.PMT function
b.rate of return
h.XIRR function
c.IPMT function
i.NPV
d.IRR
j.NPER function
e.NPV function
k.FV function
f.RATE function
l.PV function
Calculates the number of payments required to pay off a loan or reach an investment goal

Question 30

To calculate an annual rate,multiply the value returned by the RATE function by the number of payments per year._________________________

Question 31

If you don't include an fv value,Excel assumes a future value of 1._________________________

Question 32

The possibility that the entire transaction will fail,resulting in a loss of the initial investment is called the chance._________________________

Question 33

The FV function calculates the full value of an investment or loan._________________________

Question 34

As you repay a loan,each payment represents a positive cash flow as you are sending money to the lending institution._________________________

Question 35

You can extrapolate a series of values from the Series dialog box._________________________

Question 36

MATCHING
Identify the letter of the choice that best matches the phrase or definition.
a.PPMT function
g.PMT function
b.rate of return
h.XIRR function
c.IPMT function
i.NPV
d.IRR
j.NPER function
e.NPV function
k.FV function
f.RATE function
l.PV function
Calculates the per period interest rate required to pay off a loan or reach an investment goal

Question 37

If the NPER function returns the error value #REF a loan cannot be paid back in any length of time._________________________

Question 38

Amortization schedules often format all entries as positive values,and then label the columns to indicate the values represent negative values._________________________

Question 39

MATCHING
Identify the letter of the choice that best matches the phrase or definition.
a.PPMT function
g.PMT function
b.rate of return
h.XIRR function
c.IPMT function
i.NPV
d.IRR
j.NPER function
e.NPV function
k.FV function
f.RATE function
l.PV function
Calculates the payment in each period required to pay off a loan or reach an investment goal

Question 40

If you plan to invest money for 18 months,the value of the nper argument in the PMT function is 1.5._________________________

Question 41

The ____ function calculates the number of payment periods in an investment or loan.

A) RATE
B) PV
C) NPER
D) FV

Question 42

MATCHING
Identify the letter of the choice that best matches the phrase or definition.
a.PPMT function
g.PMT function
b.rate of return
h.XIRR function
c.IPMT function
i.NPV
d.IRR
j.NPER function
e.NPV function
k.FV function
f.RATE function
l.PV function
The difference between the present value of an investment and the initial expenditure on that investment

Question 43

With the PMT function,the type argument is ____ when the payments are made at the beginning of each period.

A) 0
B) 1
C) a
D) -1

Question 44

The PMT value is also known as the ____ payment.

A) periodic
B) placement
C) inflow
D) indexed

Question 45

The ____ function calculates the interest rate charged or received during each payment period.

A) RATE
B) PV
C) NPER
D) FV

Question 46

MATCHING
Identify the letter of the choice that best matches the phrase or definition.
a.PPMT function
g.PMT function
b.rate of return
h.XIRR function
c.IPMT function
i.NPV
d.IRR
j.NPER function
e.NPV function
k.FV function
f.RATE function
l.PV function
Calculates the present value of a series of future cash flows

Question 47

Cash flow is the movement of cash assets ____ an account.

A) into
B) out of
C) into or out of
D) none of the above

Question 48

The ____ function calculates the amount paid into an investment or loan during each payment period.

A) NPER
B) RATE
C) PMT
D) INT

Question 49

The ____ function calculates the present value of an investment or loan.

A) PRES
B) PV
C) NPER
D) FV

Question 50

MATCHING
Identify the letter of the choice that best matches the phrase or definition.
a.PPMT function
g.PMT function
b.rate of return
h.XIRR function
c.IPMT function
i.NPV
d.IRR
j.NPER function
e.NPV function
k.FV function
f.RATE function
l.PV function
Return rate for a series of future cash flows that will result in a net present value of zero

Question 51

MATCHING
Identify the letter of the choice that best matches the phrase or definition.
a.PPMT function
g.PMT function
b.rate of return
h.XIRR function
c.IPMT function
i.NPV
d.IRR
j.NPER function
e.NPV function
k.FV function
f.RATE function
l.PV function
Calculates the future value of a loan or an investment

Question 52

To calculate the number of ____ payments required to pay off a loan or meet an investment goal,use the NPER function.

A) monthly
B) daily
C) quarterly
D) either a.or c.

Question 53

Financial functions format calculated values as currency,with ____.

A) positive cash flow appearing in red font
B) positive cash flow enclosed in parentheses
C) negative cash flow appearing in green font
D) negative cash flow appearing in red font

Question 54

MATCHING
Identify the letter of the choice that best matches the phrase or definition.
a.PPMT function
g.PMT function
b.rate of return
h.XIRR function
c.IPMT function
i.NPV
d.IRR
j.NPER function
e.NPV function
k.FV function
f.RATE function
l.PV function
Calculates the internal rate of return for a series of unevenly spaced payments

Question 55

FV is used to calculate the ____ of a fund.

A) future value
B) fixed value
C) forecast value
D) first value

Question 56

To calculate the number of quarterly payments required to pay off a loan,use the ____ function.

A) PMT
B) PV
C) FV
D) NPER

Question 57

With the PMT function,the type argument is ____ when the payments are made at the end of each period.

A) 0
B) 1
C) a
D) -1

Question 58

MATCHING
Identify the letter of the choice that best matches the phrase or definition.
a.PPMT function
g.PMT function
b.rate of return
h.XIRR function
c.IPMT function
i.NPV
d.IRR
j.NPER function
e.NPV function
k.FV function
f.RATE function
l.PV function
Calculates the present value of a loan or an investment

Question 59

The ____ function calculates the future value of an investment or loan.

A) RATE
B) PV
C) NPER
D) FV

Question 60

MATCHING
Identify the letter of the choice that best matches the phrase or definition.
a.PPMT function
g.PMT function
b.rate of return
h.XIRR function
c.IPMT function
i.NPV
d.IRR
j.NPER function
e.NPV function
k.FV function
f.RATE function
l.PV function
An interest rate that compares the value of current dollars to future dollars from a series of cash flows

Question 61

As shown in the accompanying figure,in a(n)____ trend,the values do not change by a constant amount.

A) periodic
B) growth
C) orthogonal
D) linear

Question 62

The difference between a company's sales revenue and the cost of goods sold is the company's ____.

A) cost of operation
B) gross profit
C) growth trend
D) total revenue

Question 63

To calculate the annual rate,you must ____ the value returned by the RATE function by the number of payments per year.

A) add
B) subtract
C) multiply
D) divide

Question 64

As shown in the accompanying figure,when plotted,a(n)____ trend displays the greatest increases near the end of the series.

A) periodic
B) growth
C) orthogonal
D) linear

Question 65

In a(n)____ trend,the values change by a constant amount.

A) linear
B) growth
C) periodic
D) orthogonal

Question 66

A(n)____ shows how much money a business makes or loses over a specified period of time.

A) income projection
B) expense report
C) profit analysis
D) income statement

Question 67

As shown in the accompanying figure,a(n)____ trend appears as a straight line.

A) periodic
B) growth
C) orthogonal
D) linear

Question 68

To ____ a series,the cells between the first and last cells in the series must be blank.

A) extrapolate
B) concatenate
C) integrate
D) interpolate

Question 69

Most Excel financial functions require a particular ____ to the cash flow to return the correct value.

A) index
B) valence
C) orientation
D) direction

Question 70

The item marked 1 in the accompanying figure represents the ____ trend.

A) periodic
B) growth
C) orthogonal
D) linear

Question 71

In a(n)____ trend,values change by a constant percentage and usually appear as a curve.

A) linear
B) growth
C) periodic
D) orthogonal

Question 72

The item marked 2 in the accompanying figure represents the ____ trend.

A) periodic
B) growth
C) orthogonal
D) linear

Question 73

As shown in the accompanying figure,later payment periods apply more of the payment toward the ____.

A) index
B) interest rate
C) interest
D) principal

Question 74

If the NPER function returns the error value ____,the loan cannot be paid back in any length of time.

A) #REF!
B) #NUM!
C) #TIME!
D) #PER!

Question 75

Income statements are often created ____.

A) monthly
B) semiannually
C) annually
D) any of the above

Question 76

In the function =CUMIPMT(rate,nper,pv,start,end,type),it is ____ that defines whether the payments are made at the beginning or end of each period.

A) rate
B) nper
C) end
D) type

Question 77

When you borrow money,the money you receive represents a ____ cash flow.

A) positive
B) negative
C) fixed
D) neutral

Question 78

The ____ function returns the amount of a particular payment that is used to pay the interest on the loan.

A) PMT
B) IPMT
C) INPMT
D) NPMT

Question 79

Which of the following shows the syntax of the NPER function?

A) =NPER(pmt,pv,[fv=0],[type=0])
B) =NPER(rate,pmt,[fv=0],[type=0])
C) =NPER(rate,pmt,pv [,fv=0] [,type=0])
D) =NPER(pmt,rate,pv,[fv=0],[type=0])

Question 80

When using the PMT function to calculate monthly loan payments,the interest rate and the number of payments should be based on the interest rate per month and the total ____ to pay off the loan.

A) weeks
B) months
C) years
D) any of the above