ECONOMICS
BUDGETING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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principal modification.
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the time value of money.
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opportunity cost.
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inflationary impact.
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Detailed explanation-1: -Present value is the value today of an amount of money in the future. If the appropriate interest rate is 10 percent, then the present value of $100 spent or earned one year from now is $100 divided by 1.10, which is about $91.
Detailed explanation-2: -the present value of current and future benefits minus the present value of current and future costs. What is the present value of $100 received one year from now, if the interest rate is 5%? a. $1, 200.
Detailed explanation-3: -$110 is the future value of $100 invested for one year at 10%, meaning that $100 today is worth $110 in one year, given that the interest rate is 10%.
Detailed explanation-4: -The future value of $1, 000 one year from now invested at 5% is $1, 050, and the present value of $1, 050 one year from now assuming 5% interest is earned is $1, 000.