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If the interest rate is zero the future value interest factor equals?
Wiki User
∙ 2012-03-10 02:38:57
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Wiki User
∙ 2012-03-10 02:38:57
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What happens to the future value of money when the inflation rate exceeds the interest rate?
it increases
Why does the real interest rate affect planned aggregate expenditure?
Because the interest rate affects opportunity cost of holding money/spending it. Higher interest increases the future value of current money, and this change the optimal allocation decision of it in the present. For example, the less valuable money is in the future, the more of it you would expect people to spend now.
If the inflation premium for a bond goes up the price of the bond?
The price of the bond decreases; the inflation premium would increase the market interest rate, which in bond valuation is located in the denominator, and the coupon payment rate is located in the numerator. When calculating the NPV of future coupon payments, as the denominator or market interest rate + inflation premium increases, the Net Present Value of future coupon payments decreases and the overall value of the bond decreases as well. The price of the bond decreases; the inflation premium would increase the market interest rate, which in bond valuation is located in the denominator, and the coupon payment rate is located in the numerator. When calculating the NPV of future coupon payments, as the denominator or market interest rate + inflation premium increases, the Net Present Value of future coupon payments decreases and the overall value of the bond decreases as well.
Internal rate of return?
Internal rate of return is the rate at which your future cash flow when discounted equals to the present value of your investment or proposed investment.
How do interest rates affect corporate bond value?
When interest rates rise, bonds lose value; when interest rates fall, bonds become more attractive.
What is FVIFA useful for?
Future value interest factor annuity
What is the difference between present value interest factors versus future value interest factor?
The Present Value Interest Factor PVIF is used to find the present value of future payments, by discounting them at some specific rate. It decreases the amount. It is always less than oneBut, the Future Value Interest Factor FVIF is used to find the future value of present amounts. It increases the present amount. It is always greater than one.
Is the present value factor the exponent of the future value factor?
The present value factor is the exponent of the future value factor. this is the relationship between Present Value and Future Value.
What is the relationship between pvif and pvifa?
PVIF (Present Value Interest Factor) is a table which shows the present value of sum which will be realiseed in the future. PVIFA (Present Value Interest Factor of Annuity) is similar to a PVIF but tailored to one or a group of Annuities.
Do future value calculators account for inflation?
No. Future Value Calculators use a set amount, payment and interest fee to calculate. If you need to apply the inflation factor, you will need to use an Inflation Calculator.
The present value of future cash flows has what relationship to interest rate?
The present value of future cash flows is inversely related to the interest rate.
What effect do interest rates have on the calculation of future and present value How does the length of time affect future and present value How do these two factors correlate?
What effect do interest rates have on the calculation of future and present value, how does the length of time affect future and present value, how do these two factors correlate.
What is the relationship between interest rate with present value and future value?
direct
What is the future value of 25000 at 8 percent interest in 10 years?
Future value= 25000*(1.08)10 =53973.12
How does compound interest affect the future value of an investment?
Increases
What is the future value of 1200 a year for 40 years at 8 percent interest?
What is the future value of $1,200 a year for 40 years at 8 percent interest? Assume annual compounding.
What is the relationship between present value factor and annuity present value factor?
Present value annuity factor calculates the current value of future cash flows. The present value factor is used to describe only the current cash flows.
