TVM: Part 1 Flashcards
1
Q
What is TVM?
A
Its the concept that a dollar today is not worth the same as in the future
due to things such as inflation + consumer preferences
2
Q
What does TVM describe the relationship between
A
a current dollar and its future value
3
Q
What is the current value of any asset
A
Its the asset’s future cash flow discounted to today
4
Q
What is it when we discount cash flows to today (the process specifically)
A
Its called present value
5
Q
What are the discount rates
A
Its how tvm is accounted for to see what the cash flows are today
6
Q
What is future value
A
How much the cash flow in the future will be
7
Q
For future values what is the discount rate?
A
Interest rates
8
Q
A
