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Business
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| Number of pages / Number of words: |
6 / 1589 |
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The converse is also true, the higher the discount rate the lower the present value of the sum. The calculation used to find present value is often used with lotteries. Lottery winnings can be paid in one lump sum or in equal structured payments made regularly, also known as annuities.
Future Value
The future value of money is simply the amount of money that will be earned on a given sum of money at a certain time in the future...
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In calculating the future value, one should measure the value of money that is allowed to grow at a given interest rate over a period. Let us say an investor has $50,000 and would like to know the value of his money after four years, at an annual rate of 5 percent. At the end of the first year, the investor will have $50,000 ? 1...
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