Topic
Present and Future Value
Instructions
- Identify the factors used to calculate present and future cash flows.
- Distinguish between the annual percentage rate and effective annual rate, and how each is used in financial decision making.
- Describe the various types of annuities and how they are calculated.
Answer preview
There are several factors to be considered when calculating present value and future vale of an investment. Firstly, the main principal applied in this case is a dollar today is not same as a dollar tomorrow. This implies that there are factors that need to be considered before we compare value of currency today with that of currency tomorrow.
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