Compounding serves as the basis of all time value of money considerations.

Question

Quizplus · Accepted Answer

Compounding is the process by which interest is earned on both the principal amount and any previously earned interest. This concept is fundamental in understanding the time value of money, which considers the value of money over time due to earning interest or returns. Therefore, compounding serves as the basis for all time value of money considerations.

Compounding Serves as the Basis of All Time Value of Money