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The Present Value of a $1000 Payment Received 2 Years

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The present value of a $1000 payment received 2 years from now at 5% annual interest will be less than $900 because of


Definitions:

Collateral

An asset pledged by a borrower to secure a loan or other credit, and subject to seizure if the loan is not repaid according to the agreed terms.

Specific Assets

Assets identified and itemized separately for accounting, legal, or financial purposes.

Market Price

The prevailing market rate at which one can purchase or sell an asset or service.

Common Stock

Equity investments that represent ownership in a company and typically grant voting rights to shareholders.

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