Question

The adjustment for time value of money is made through

a)Interest rate
b)Inflation rate​

Answer 1

Answer:

A , Interest rate .

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Answer 2

Option a) Interest rate

The adjustment for time value of money is made through Interest rate.

• Compounding and discounting are the two primary methods used in all time value of money issues. When comparing the amount of money we have in our pockets right now with the amount we must wait to receive at some point in the future, we use a process called compounding and discounting.
• The number of successful investment options and interest rates are two factors that influence the temporal value of money. These reward investors and make sure that a dollar is worth more now than it is tomorrow.
• A foundational idea in finance is the time value of money. A sum of money in your possession is worth more than a similar sum that will be paid in the future. The present discounted value is another name for the time value of money.
• Inflation and the temporal worth of money are at odds with one another. A price increase in goods and services is known as inflation. As a result, when prices increase, you can't buy as much as you could in the past since a dollar loses value.

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