Match each of the following terms related to interest and time value of money calculations to their appropriate definition.
-The concept that indicates that people should prefer to receive an immediate amount at the present time over an equal amount in the future.
A)Time value of money
B)Simple interest
C)Compound interest
D)Future value of a single amount
E)Present value of a single amount
F)Annuity
G)Future value of an annuity
H)Present value of an annuity

Question

Quizplus · Accepted Answer

The concept that indicates that people should prefer to receive an immediate amount at the present time over an equal amount in the future is the time value of money.

Answer: B
 Simple interest is a basic calculation that uses the principal amount of a loan or investment and the interest rate to determine the interest earned or paid over a certain period of time.

Answer: C
 Compound interest is similar to simple interest, but it also takes into account the interest earned on the interest that has already accumulated.

Answer: D
 The future value of a single amount is the amount that a present sum of money will grow to over a specific period of time, based on a certain interest rate.

Answer: E
 The present value of a single amount is the current value of a future sum of money that has been discounted based on a certain interest rate.

Answer: F
 An annuity is a series of equal payments or receipts that are made or received over a certain period of time.

Answer: G
 The future value of an annuity is the amount that a series of equal payments or receipts will grow to over a specific period of time, based on a certain interest rate.

Answer: H
 The present value of an annuity is the current value of a series of equal payments or receipts that have been discounted based on a certain interest rate.

Match Each of the Following Terms Related to Interest and Time