1.The present value of an amount is the value of that amount on a particular date prior to the time the amount is paid or received.
2.The present value concepts are based on the assumption that a dollar received in the future is worth less than a dollar received now.
3.The three factors required for calculating any future or present value amount include, the amount of the payments, the interest rate, and the time periods when payments are made.
4.Investment opportunities being evaluated by companies often require the use of present value calculations.
5.The interest earned in one period on interest that was earned in an earlier period is known as simple interest
6.Any investment problem can be thought of as a single amount, a series of single amounts, an annuity, or a combination of these arrangements.
7.An annuity is a series of equal or unequal amounts received or paid over a specified number of equal time periods.
8.If you needed to have $15,000 in 5 years, you would use a present value table to compute the amount you would need to invest annually to accumulate $15,000.
9.A higher interest rate will always result in a higher present value.
10.An amortization table is used to determine the present value of a series of equal annual payments at a given interest rate.