When money moves backward on the timeline,the money should be
A) divided by the given rate of interest.
B) subtracted from its future value.
C) compounded with the given rate of interest.
D) discounted with the given rate of interest.

Question

Quizplus · Accepted Answer

When money moves backward on the timeline, it means we are trying to find its present value. To find the present value, we need to discount the future value with the given rate of interest. Hence, the correct choice is to discount the money with the given rate of interest (Option D).

When Money Moves Backward on the Timeline,the Money Should Be