##### Asked by: Sughran Inhargue

asked in category: General Last Updated: 23rd June, 2020# Which best describes the present value of money?

**Present value**(

**PV**) is the current

**value**of a future sum of

**money**or stream of

**cash**flows given a specified rate of return.

**Present value**takes the future

**value**and applies a discount rate or the interest rate that could be earned if invested.

Simply so, what best describes the time value of money?

The time value of money (TVM) is the concept that money available at the present time is worth more than the identical sum in the future due to its potential earning capacity. This core principle of finance holds that provided money can earn **interest**, any amount of money is worth more the sooner it is received.

Beside above, what is the primary difference between an ordinary annuity and an annuity due quizlet? - **Ordinary Annuity** - Payments are at end of each period. - **Annuity Due** - Payments are at the beginning of each period.

In this regard, which of the following best describes the difference between an annuity due and an ordinary annuity?

Fixed **annuities** pay the same amount in each period, whereas the amounts can change in variable **annuities**. The payments **in an ordinary annuity** occur at the end of each period. In contrast, an **annuity due** features payments occurring at the beginning of each period.

Is an investment that pays a stream of equal payments over time?

Glossary | |
---|---|

annuity | A stream of equal periodic cash flows over a stated period of time |

annuity due | An annuity for which the payments occur at the beginning of each period. |

compound interest | Interest earned both on the initial principal and on the interest earned in previous periods. |