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Concept Version 5
Created by Boundless

Present Value and the Time Value of Money

Money

Money

Assuming a 5% interest rate, $100 invested today will be worth $105 in one year ($100 multiplied by 1.05). Conversely, $100 received one year from now is only worth $95.24 today ($100 divided by 1.05), assuming a 5% interest rate.

Source

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    http://upload.wikimedia.org/wikipedia/en/f/fa/Stacks_of_money.jpg CC BY-SA.

Related Terms

  • time value of money
  • present value
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