To Calculate the Time Value of Money,we Need to Consider

question 23

Multiple Choice

To calculate the time value of money,we need to consider all of the following except the

• A) amount of the savings.
• B) Annual interest rate.
• C) Length of time the money is invested.
• D) Type of investment.
• E) Principal.

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Definitions:

Future Value

The eventual worth of an asset or cash that matches the value of a predetermined present sum.

Compounding

The process where the value of an investment increases because the earnings on an investment, both capital and interest, earn interest as time passes.

Rate of Return

The uplift or shortfall in the value of an investment during a specific interval, portrayed as a percentage of the investment’s original pricing.

Account Value

The total worth of a financial account, considering all assets and liabilities within the account.