The present value of a sum is:
A)The value of the sum at the end of a given period of time.
B)The value of the sum at the beginning of a given period of time.
C)The value of investing the sum at the beginning of the given period of time rather than at the end.
D)The value of investing the sum at the end of the given period of time rather than at the beginning.
E)None of the above.

Question

Quizplus · Accepted Answer

The present value of a sum is the value of the sum at the beginning of a given period of time. It takes into account the time value of money, meaning that money is worth more in the present than it is in the future due to inflation and the potential to earn interest or returns on investment. Therefore, to find the present value of a sum, we need to discount the future value of the sum using an appropriate interest rate to get the value in today's dollars.

The Present Value of a Sum Is