Asked by Chintan Kothari on May 14, 2024
Verified
The present value of $4,000 deposited today at 8 percent interest is $5,038.85 three years from now.
Present Value
The value at present of future monetary sums or cash flow streams, determined by applying a given rate of return.
Interest
The payment made for the use of (borrowed) money.
- Understand the influence of interest rates on economic conditions and personal financial choices.
Verified Answer
NQ
Nguy?n QuânMay 18, 2024
Final Answer :
False
Explanation :
The present value refers to the current worth of a future sum of money or stream of cash flows given a specified rate of return. If $4,000 is deposited today at an 8 percent interest rate, $5,038.85 would be the future value of that deposit in three years, not the present value.
Learning Objectives
- Understand the influence of interest rates on economic conditions and personal financial choices.