# Also note that given a discount rate of 0 percent the

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Unformatted text preview: e future value (\$1.00). But for any discount rate greater than zero, the present value is less than the future value of \$1.00. Comparing Present Value and Future Value We will close this section with some important observations about present values. One is that the expression for the present value interest factor for i percent and n periods, 1/(1 i)n, is the inverse of the future value interest factor for i percent and n periods, (1 i)n. You can confirm this very simply: Divide a present value interest factor for i percent and n periods, PVIFi,n, given in Table A–2, into 1.0, and compare the resulting value to the future value interest factor given in Table A–1 for i percent and n periods, FVIFi,n,. The two values should be equivalent. Second, because of the relationship between present value interest factors and future value interest factors, we can find the present value interest factors given a table of future value interest factors, and vice versa. For example, the future value interest factor (from Table A–1) for 10 percent...
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