ECONOMICS
COST BENEFIT ANALYSIS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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The future value is low and the time is long
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The future value is low and the time is short
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The future value is high and the time is long
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The future value is high and the time is short
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Detailed explanation-1: -What happens to the present value as the time to the future value increases? The present value decreases as you increase the time between the future value date and the present value date.
Detailed explanation-2: -The discount rate or interest rate can affect the present value of future cash flows. If the discount rate is lower (representing a lower risk and a lower required return), the present value is higher, and vice versa.
Detailed explanation-3: -The time value of money is a basic financial concept that holds that money in the present is worth more than the same sum of money to be received in the future. This is true because money that you have right now can be invested and earn a return, thus creating a larger amount of money in the future.
Detailed explanation-4: -Present value is the sum of money that must be invested in order to achieve a specific future goal. Future value is the dollar amount that will accrue over time when that sum is invested. The present value is the amount you must invest in order to realize the future value.