Which of the following statements is correct?
A)The process of moving a value or cash flow forward in time is known as discounting.
B)The effect of earning interest on interest is known as compound interest.
C)It is possible to compare or combine values at different points in time.
D)A dollar in the future is worth more than a dollar today.
E)Calculating the value of a future cash flow at an earlier point in time is known as compounding.

Question

Quizplus · Accepted Answer

Compound interest refers to the phenomenon where interest is earned on both the initial principal and the interest that has been accumulated over previous periods, leading to growth at an exponential rate.

Which of the Following Statements Is Correct