What is the relationship between the present value and future value interest factors?
A) The present value and future value factors are equal to each other.
B) The present value factor is the exponent of the future value factor.
C) The future value factor is the exponent of the present value factor.
D) The factors are reciprocals of each other.
E) There is no relationship between these two factors.

Question

Quizplus · Accepted Answer

The present value factor and future value factor are reciprocals of each other. This means that if you multiply the present value factor by the future value factor, you will get 1. This relationship holds true for any interest rate and any number of periods.

What Is the Relationship Between the Present Value and Future