What is the relationship between 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 is the reciprocal of the future value factor. This means that if we multiply the present value factor by the future value factor, we get 1. For example, if the present value factor is 0.9091, the future value factor would be 1/0.9091=1.1. This relationship is important in time value of money calculations as it allows us to easily convert between present and future values.

What Is the Relationship Between Present Value and Future Value