Use the Figure for the Question(s) Below

question 78

Multiple Choice

Use the figure for the question(s) below.

-Which of the following statements regarding the timeline is FALSE?

• A)Date 1 is the end of the first year.
• B)Date 0 is the beginning of the first year.
• C)The space between date 0 and date 1 represents the time period between two specific dates.
• D)You will find the timeline most useful in tracking cash flows if you interpret each point on the timeline as a period or interval of time.

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Definitions:

Compounded Quarterly

The method of calculating interest where the interest is added to the principal sum four times a year.

Compounded Annually

A method of calculating interest where the interest earned over a year is added to the principal, and the sum becomes the principal for the next year.

Future Value

The value of an investment or loan at a specific date in the future, calculated using the current value and the expected rate of growth or interest.

Future Value

Future Value is the estimated amount of money that an investment will grow to over a specified period of time, assuming a certain rate of interest or rate of return.