To compare the value of amounts received at different times in the future, dollar amounts
A)may be restated to their present value through discounting or restated to their future value by compounding
B)must be converted to a single sum
C)must be restated to their future value by adding the compound interest to date
D)must be restated to their present value by removing the interest from the amount to be received in the future

Question

Quizplus · Accepted Answer

To compare the value of amounts received at different times in the future, the dollar amounts may be restated to their present value through discounting or restated to their future value by compounding. These techniques adjust for the time value of money and allow for a fair comparison of the value of the amounts at different points in time. Option B is not accurate as it is not always necessary to convert to a single sum. Option C is incorrect as it only considers the future value of amounts and does not account for the time value of money. Option D is incorrect as it suggests removing interest, which would not accurately reflect the value of the amount at a different point in time.

To Compare the Value of Amounts Received at Different Times