If Interest Rates Are Positive,then Discounting Increases the Future Value

question 111

True/False

If interest rates are positive,then discounting increases the future value of an investment while compounding reduces the present value of an investment.

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Definitions:

Fair Values

The estimated market value of an asset or liability, based on current conditions and knowledgeable, willing parties' transactions.

Book Values

The value of an asset as reported on the balance sheet, calculated as the original cost of the asset minus any depreciation, amortization, or impairment costs.

Gain or Loss

The financial result of disposing of an asset or settling a liability for more or less than its carrying amount.

Equity Method

An accounting technique used when a company holds significant influence over another but does not control it, allowing the investment to be recorded at original cost and adjusted for the investor's share of profits and losses.