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Time Value of Money Concepts
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Time Value of Money Concepts

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@IntelligibleLyre

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

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