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Time Value of Money Concepts

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Questions and Answers

What is the primary concept of the Time Value of Money?

The value of money increases with inflation.

Money is worth more in the future.

Money loses value over time.

A dollar today is worth more than a dollar in the future. (correct)

Which of the following factors does NOT affect the Present Value of a sum of money?

Risk of investment

Future Value (correct)

Time period

Interest rate

How is the Future Value of an investment calculated?

Present Value multiplied by the sum of interest rates.

Present Value multiplied by (1 + interest rate) raised to the number of periods. (correct)

Present Value subtracted from inflation rate over time.

Present Value divided by (1 + interest rate) raised to the number of periods.

In the context of the Time Value of Money, what does 'discounting' refer to?

<p>Determining the present value of future cash flows.</p> Signup and view all the answers

Which of the following statements about Present Value tables is true?

<p>They are used to estimate the present value of a single future cash flow.</p> Signup and view all the answers

Time Value of Money Concepts

Choose a study mode

Podcast

Questions and Answers

What is the primary concept of the Time Value of Money?

Which of the following factors does NOT affect the Present Value of a sum of money?

How is the Future Value of an investment calculated?

In the context of the Time Value of Money, what does 'discounting' refer to?

Which of the following statements about Present Value tables is true?

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