and you de Your initial discussion thread is due on Day 3 (Thursday) classmates.
ID: 2399917 • Letter: A
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and you de Your initial discussion thread is due on Day 3 (Thursday) classmates. Your grade will reflect both the quality of your initial post and the depth of your responses. Refer to the Discussion Forum Grading Rubric under the Settings icon above for guidance on how your discussion will be evaluated. Modules Grades Course Policies Writing Center & Library Present Value of an Investment Course Conferences Read: Chapters 7 and 8. Write: Make sure your response addressing the following question is more than 200 words and you include an in Tutoring on Demand text citation or a brief quote from the reading material where appropriate What is the relation between the present value of an investment and time and interest rate? Explain. Guided Response: You are required to respond in a substantive receive full discussion participation credit. manner to at least two of your classmates' postings by Students are expected to participate by actively engaging in weekly discussion forums. Please note that completing work in MyAccountingLab does not count as attendance. Stuck on a problem? Don't skip that assignment - click the button to chat with a ive tutor. It is free and here to help you now Live TUTORING Free Connect NowExplanation / Answer
The present value of an investment is based on time value of money concept "dollar received today is worth more than a dollar received at some time in the future." So, it is better to have money now rather than later. The worth more means the value of money will be more now rather in future because of inflation and buying capacity.The present value of an investment is inversely related to both time and the interest rate.The interest rate or discount rate is the opportunity cost of capital.The longer the duration of investment the higher the discount rate and the lower the present value of Investment.The longer the individual wait for the cash flow to occur and greater the discount rate and it must take into account foregone opportunities. For example:
When interest rate 10% ,future value of investment is $1000 and time period is 3 years, the present value of investment be $751.31
When interest rate 20% ,future value of investment is $1000 and time period is 4 years, the present value of investment be $482.25
When interest rate 30% ,future value of investment is $1000 and time period is 5 years, the present value of investment be $269.35.
In conclusion: As the interest rate and time increase, the present value of investment decreases.
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