In determining the interest factor (IF) for the present value of $1, one could use the reciprocal of that IF for the future value of $1 at the same rate and time period.

Question

Quizplus · Accepted Answer

This statement is true. The interest factor (IF) for the present value of $1 represents the amount of money that must be invested today in order to have $1 in the future, given a certain interest rate and time period. The reciprocal of this factor represents the amount of money that $1 will grow to in the future, given the same interest rate and time period. Therefore, using the reciprocal of the IF for the present value of $1 can be a useful tool in determining future values.

In Determining the Interest Factor (IF) for the Present Value