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As the compounding rate becomes lower and lower the future value of inflows approaches?
As the compounding rate decreases, the future value of inflows approaches the present value of those inflows. This occurs because lower compounding rates result in less growth over time, diminishing the effect of interest accumulation. Ultimately, if the compounding rate were to approach zero, the future value would converge to the total sum of the initial inflows without any interest or growth.
What else can I help you with?
If the compounding rate becomes lower and lower the future value of inflows approaches .?
the present value of the inflows
Does the future value of an investment increases as the number of years of compounding at a positive rate of interest declines?
No, the future value of an investment does not increase as the number of years of compounding at a positive rate of interest declines. The future value is directly proportional to the number of compounding periods, so as the number of years of compounding decreases, the future value of the investment will also decrease.
If an investor had to choose between daily monthly or quarterly compounding which would you choose?
The greater the number of compounding periods, the larger the future value. The investor should choose daily compounding over monthly or quarterly.
More frequent compounding results in higher future values and lower present values than less frequent compounding at the same interest rate?
Yes
Why the proses of discounting and compounding are related?
Discounting and compounding are related because both processes involve the time value of money, reflecting how the value of money changes over time. Compounding calculates the future value of an investment by applying interest over time, while discounting determines the present value of future cash flows by removing the effects of interest. Essentially, discounting is the reverse of compounding; where compounding grows an amount, discounting reduces it to its present value, both using the same interest rate concept. Together, they provide a comprehensive understanding of how money behaves over time in financial contexts.
When there is only one compounding period in a ordinary annuity the table factor for future value is always 1?
True
What is the difference between compounding and discounting?
Compounding finds the future value of a present value using a compound interest rate. Discounting finds the present value of some future value, using a discount rate. They are inverse relationships. This is perhaps best illustrated by demonstrating that a present value of some future sum is the amount which, if compounded using the same interest rate and time period, results in a future value of the very same amount.
What is the future value of 1200 a year for 40 years at 8 percent interest?
What is the future value of $1,200 a year for 40 years at 8 percent interest? Assume annual compounding.
What is the future value of 10000 for an interest rate of 16 percent and 1 annual period of compounding?
With only one year the value is 11600
Will we make future cars?
Every year car manufacturers release future cars. Every day the present becomes past and the future becomes present. Makes you think doesn't it.
What is the future tense of did?
The future tense of "did" is "will do." For example, "I did my homework" becomes "I will do my homework."
Why is accrual basis accounting acceptable for most business enterprises?
An accounting method that measures the performance and position of a company by recognizing economic events regardless if there is cash transaction. The method allows the current cash inflows/outflows to be combined with future expected cash inflows/outflows to give a more accurate picture of a company's current financial state.
