Asked by Jackson Lukens on May 20, 2024
Verified
The present value of any future sum of money is the amount that would be needed today, at current interest rates, to produce that future sum.
Present Value
Present Value is a financial concept that determines the current worth of a future sum of money or stream of cash flows, given a specific rate of return.
Current Interest Rates
The prevailing rates at which borrowers can obtain loans and lenders can provide them, often set by central banks or market forces.
- Master the interrelation of interest rates with present and future value.
Verified Answer
AP
Andri PreimaMay 21, 2024
Final Answer :
True
Explanation :
The present value concept reflects the idea that a specific amount of money in the future is worth less than the same amount today, due to the potential earning capacity of money over time at current interest rates.
Learning Objectives
- Master the interrelation of interest rates with present and future value.