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Q: Why is the Present Value of future amount greater whe the dicaount rate is lower?

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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.

The future amount itself and a discount rate.

Interest rates are also known as discount rates because in order to calculate the present value of a future amount, the future amount must be discounted back to the present

F = Future value P = Present Value i = Intrest Rate n = no. of years Therefore, the formula for future value of present amount :- F= P (1+i)n

The present value annuity formula is used to simplify the calculation of the current value of an annuity. A table is used where you find the actual dollar amount of the annuity and then this amount is multiplied by a value to get the future value of that same annuity.

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the current dollar value of a future amount

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.

The future amount itself and a discount rate.

This is false. The farther into the future any given amount is received the smaller its present value.

Interest rates are also known as discount rates because in order to calculate the present value of a future amount, the future amount must be discounted back to the present

F = Future value P = Present Value i = Intrest Rate n = no. of years Therefore, the formula for future value of present amount :- F= P (1+i)n

The amount of money that you will make in the future will depend on what you are currently doing. Your present investment or income generating activities will influence the amount of money to make in the future to a great extent.

There is a past, present, and future. There was a past; there is a present and there will be a future.

Past - was Present - is Future - will be

Compounding finds the future value of a present value using a compound interest rate. Discounting finds the present value of some future value, using a discount rate. They are inverse relationships. This is perhaps best illustrated by demonstrating that a present value of some future sum is the amount which, if compounded using the same interest rate and time period, results in a future value of the very same amount.

It is discounting. Good luck!

present and future