All categories

3 years ago

The present value of a lump sum future amount:__________

Business

1 answer:

SVEN [57.7K]3 years ago

6 0

Answer:

d) increases as the interest rate decreases.

Explanation:

Present value is the value today; future value is the value some time in the future.

The mere notion of the value of money in time should tell you that, further away in time (towards the future) a sum of money is found, the lower its value today.

Then, you should be able to rule out some propositions that are contrary to that intuition:

a) decreases as the time period decreases ↔ clearly false: the present value increases as the time period decreases

e) is directly related to the time period. ↔ clearly false: the present value is inversely related to the time period.

How is the present value related to the future value?

They are directly related: the higher a lump sum in the future the higher the value of it in the present; more money is more money always. More money in the future has more value in the present; less money in the future has less value in the present. Thus, the option b). is inversely related to the future value is false

How is the present value related to the interest rate?. Which one is true?

c) is directly related to the interest rate, or

d) increases as the interest rate decreases

The present value is calculated discounted the future value at the interest rate. The interest rate is in the denominator of the equation to pass from future value to present value. Thus, they are inversely related (c is false); the less the interest rate, the higher the present value of a future amount (confirm d is true).

Therefore, the correct answer is that the present of a lump sum future amount: d) increases as the interest rate decreases.

You might be interested in

The average annual return form stock investments historically is: a) 11.3% b) 12% c) 12.5% d) 20$

MArishka [77]

Answer: i dotn noy

Explanation:

7 0

2 years ago

Read 2 more answers

When the Federal government takes action to change taxes and spending to stimulate the economy such policy is:_________

vova2212 [387]

Answer:

c. Discretionary

Explanation:

The discretionary policy is the policy that depends upon the judgement of the people who made the policy. It also deals in the decision making with respect to the monetary and fiscal policy

So here in the given situation, it is mentioned at the time of taking the action by the federal government with respect to change in the taxes and the spending in order to stimulate the economy

So this situation represents the discretionary policy

therefore the option c is correct

3 0

3 years ago

Fredrick purchased a property worth $150,000 on mortgage. He paid $30,000 as a down payment on this property. However, a recent

Eva8 [605]

Answer:

Real estate short sale

Explanation:

Real estate is defined as a piece of land and any attached property that is constructed on it.

In real estate business a real estate short sale occurs when the person that owns a property decides to sell the property at a price that is less than the amount on the mortgage.

This usually occurs as a result of financial distress of the owner.

In the given scenario the property has a mortgage value of $150,000 and down payment of $30,000 has been made.

The mortgage amount is now $150,000 - $30,000 = $120,000

However they now sell the property for $115,000 which is less than the remaining mortgage value of $120,000.

This is and example of real estate short sale.

5 0

3 years ago

The Consumer Price Index is a way that the U.S. government measures ____.

Ludmilka [50]

Answer:

prices of all goods and services bought by US households

Explanation:

3 0

3 years ago

In california there are ____ forms of financial responsibility.

cluponka [151]

In california there are 4 forms of financial responsibility.

7 0

3 years ago