What is the time value of money and how can compound interest be used to calculate the present value of any future amount of money?

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Retselisitsoe PokothoaneLv10

28 Sep 2019

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The time value of money refers to the issue of:

A. what the value of the stream of future cash flows is today.

B. why a dollar received tomorrow is worth more than a dollar received today.

C. what the time required to double an amount of money.

D. why people prefer to consume things at some time in the future rather than today.

amaranthmouse551

Present Value Calculator Application: A bank wants to show its customers how much they would need to invest to achieve a specified financial goal (future value) in 5, 10, 15, 20,25, and 30 years. users must provide their financial goal (the amount of money desired after a specified number of years has elapsed), an interest rate, and the length of the investment in years. Create an application that calculates and displays the principal (initial amount to invest) needed to achieve the user's financial goal. Your application should allow the user to invest money for 5, 10, 15, 20,25, or 30 years. For example, if a customer want to reach the financial goal of $15,000 over a period of 5 years when the interest rate is 6.6%, the customer would need to invest $10,896.96 as shown below.

The present value calculation formula is given as: where:

p if the amount needed to achieve the future value

r if the annual interest rate (for example 6.6% if equal to 0.066)

n if the number of years

a is the future-value amount.

pearmanatee588

Lonnie needs extra money to buy a truck to start up a delivery service. He takes out a simple interest loan for $4000 for 3 months at the rate of 5.25%. How much interest must he pay and what is the future value of the loans?

A. interest: $52.50; future value: $4052.50

B. interest: $57.27; future value: $4057.27

C. interest: $65.50; future value: $4065.50

D. interest: $630; future value: $4630