The time value of money refers to the fact that a dollar received today is? worth:
more than a dollar recieved tomorrow because it can be saved and earn interest
The time value of money is a measure of
the opportunity cost of spending a dollar.
The time value of money concept is most commonly applied? to:
single dollar amounts, where both present and future values can be determined
An annuity is
a stream of equal payments that are received or paid at a determined time interval.
Compounding is the
process by which the money you are holding accumulates interest over time.
Compounding can help you
forecast the funds that will be available to you at retirement.
The two methods that can be used to calculate future values? are:
future value interest factors or financial calculator
Determining the present value of an amount is useful when you want? to
have a certain amount of money for a down payment for a house in three years
The formula used to determine the present value of an annuity? is:
PVA=PMT�PVIFAi,n.
The present value of an annuity indicates what a series? of
individual cash flows is worth to you now if you can invest your funds at an interest rate i.
Jerry would like to save the same amount every month until he turns 40. Which time value of money concept should he use to compute the value of his savings at that? time?
the future value of an annuity to compute the expected future value of his equal monthly payments.