Which type of computation would a person use to determine current value of a desired amount for the future?
A. Present value of a series of deposits
B. Future value of a single amount
C. Future value of a series of deposits
D. Present value of a single amount
I believe The Answer is D
My answer is D, also.
To determine the current value of a desired amount for the future, a person would use the computation of D. Present value of a single amount. This calculation takes into consideration factors such as the desired future value, the interest rate, and the time period, in order to determine the present value of that desired amount.
To determine the current value of a desired amount for the future, you would use the computation method known as the Future value of a single amount.
The Future value of a single amount calculation is used to find out the worth of an investment or sum of money at a future date, given a specific interest rate. It takes into account factors such as the initial amount, the duration of the investment, and the interest earned over time.
To calculate the future value of a single amount, you would use the following formula:
Future Value = Present Value * (1 + r)^n
Where:
- Present Value (PV) is the current amount of money you have or the initial investment.
- r is the interest rate per period. This can be an annual, monthly, or any other defined rate.
- n is the number of periods or the duration of the investment.
By inputting the desired future amount, the interest rate, and the time period into this formula, you can determine the present value needed to achieve the desired future value.