Present and Future Values Concepts Are Not Applied to Which

question 4

Multiple Choice

Present and future values concepts are not applied to which of the following?

• A) Payments on a home
• B) Calculation of withdrawals needed during retirement
• C) Calculation of savings for a large purchase
• D) The balance of your checking account today

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Definitions:

Payback Calculation

A financial analysis method used to determine the time required to recoup the cost of an investment, based on the cash inflows from the investment.

Time Value

Time value refers to the concept that money available at the present time is worth more than the same amount in the future due to its potential earning capacity.

Money

A medium of exchange used to facilitate transactions for goods and services.

Net Present Value

A method used to evaluate an investment's profitability by calculating the present values of all cash inflows and outflows.