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Unformatted text preview: Write a 200- to 300-word description of the four time value of money concepts: present value, present value of an annuity, future value, and future value of annuity. Describe the characteristics of each concept and provide an example of when each would be used. The present value is the value on the day of for a payment that occurs in the future, thereby has to take into account the time value of money as well as investment risk. This is generally a calculation used to compare cash flow at the present while maintaining future value. In investing for example, if someone has money saved up, they have the option to spend it or invest it. If they invest it, the real value of the money today will go up, by using risk free interest rates. Or you can evaluate present value into the future which will show much interest will accrue. So if you want to rates....
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- Spring '10