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Questions and Answers
What is the primary concept of the Time Value of Money?
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?
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?
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?
In the context of the Time Value of Money, what does 'discounting' refer to?
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Which of the following statements about Present Value tables is true?
Which of the following statements about Present Value tables is true?
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