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When interest rate is positive what happens to the value of money as?
decreases
What happens to the future value of money when the inflation exceeds the interest rate?
it will increase
What happens to the future value of money when the inflation rate exceeds the interest rate?
it increases
What happens when the government borrows a lot of money?
whenever more money is printed.. the dollar value becomes less.. simple as that.
How interest rate affect business?
Interest rates affect the value of money. Businesses depend on money. So when money has a higher value, businesses are happy. When money has a lower value, businesses are not so happy.
How can interest rate affect business?
Interest rates affect the value of money. Businesses depend on money. So when money has a higher value, businesses are happy. When money has a lower value, businesses are not so happy.
What happens to the present value of an annuity when the interest rate decreases?
it increases
What does time value of money refer to?
The time value of money is the increase in, or future/prjected value of, an amount of money, due to the implied interest earned on it over a period of time.
What happens to the present value of an annuity when the interest rate raises?
decreases towards the future value faster
Is the present value interest factor always negative?
No, the present value interest factor (PVIF) is not always negative; in fact, it is typically a positive value. The PVIF is calculated using the formula ( PVIF = \frac{1}{(1 + r)^n} ), where ( r ) is the interest rate and ( n ) is the number of periods. Since both ( (1 + r) ) and ( n ) are positive, the PVIF itself is also positive, representing the present value of future cash flows.
What is the definition of present value?
The principal which, drawing interest at a given rate, will amount to the given sum at the date on which this is to be paid; thus, interest being at 6%, the present value of $106 due one year hence is $100.
Disadvantages of time value of money?
The disadvantages of time value of money are not knowing the interest rates or growth projections of money. It is impossible to forecast accurately inflation rates.
