Question

The future value of an amount is always -------- its present value.

A) greater than
B) less than
C) equal to
D) not equa​

Answer 1

Step-by-step explanation:

If you're like most people, you would choose to receive the $10,000 now. After all, three years is a long time to wait. Why would any rational person defer payment into the future when he or she could have the same amount of money now? For most of us, taking the money in the present is just plain instinctive. So at the most basic level, the time value of money demonstrates that all things being equal, it seems better to have money now rather than later.

Answer 2

It is always greater than its present value.

• As money offers interest-earning potential or time worth, PV is ordinarily less than FV. Unless interest rates are zero or negative, where present one will be equal to or greater than the future one.
• The time worth is a fundamental financial concept stating that amount received currently, is considerable than the amount received later.
• This is precise because money one has now may be invested and produce a profit, resulting in a more considerable sum of money in the future.
• Loans, mortgages, annuities, sinking funds, bonds, and other financial instruments are valued using these values.