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Money
Money

21 - JustAnswer
21 - JustAnswer

... 21.Which of the following is true about lower-of-cost-or-market? a.It is inconsistent because losses are recognized but not gains. b.It usually understates assets. c.It can increase future income. d.All of these. 22.The primary basis of accounting for inventories is cost. A departure from the cost b ...
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... guarantee the bank a cost of funds of 4.88 percent (annualized and discounted), ignoring basis risk. If rates went to 8 percent, the bank would gain on its future position since it could cover its short with lower costs. This profit (3.12 percent on an annual basis) would off-set the higher borrowin ...
A Brief Exposition of the IS-MP Curves: A Replacement for the
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... The world economy is today in shambles. Equally, but perhaps less consequentially, the short-run macro models used today are in crisis. This note focuses on an updated approach to the central tool of short-run macro, the IS-LM analysis and IS-LM curves. This applies primarily to the closed economy, ...
theory of capital structure
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... As we previously uncovered when we looked at financial leverage, this is not a surprising result. As a firm increases its use of debt, the risk to the stockholder increases and, as a consequence, the stockholder’s required rate of return will increase. Modigliani and Miller simply defined how the st ...
finance - I blog di Unica
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... 2 Read part of a presentation. Write the words in brackets as an adjective or adverb. This pie chart shows the differences between the three sectors are (9)_________________(strike). Our Europe markets fell (10)_________________(dramatic) compared with last year. Though this market is still (11) __ ...
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disinformation on government debt accumulation

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the money supply and the framework of monetary

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Mortgage/Banking

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Present value

In economics, present value, also known as present discounted value, is the value of an expected income stream determined as of the date of valuation. The present value is always less than or equal to the future value because money has interest-earning potential, a characteristic referred to as the time value of money, except during times of negative interest rates, when the present value will be greater than the future value. Time value can be described with the simplified phrase, “A dollar today is worth more than a dollar tomorrow”. Here, 'worth more' means that its value is greater. A dollar today is worth more than a dollar tomorrow because the dollar can be invested and earn a day's worth of interest, making the total accumulate to a value more than a dollar by tomorrow. Interest can be compared to rent. Just as rent is paid to a landlord by a tenant, without the ownership of the asset being transferred, interest is paid to a lender by a borrower who gains access to the money for a time before paying it back. By letting the borrower have access to the money, the lender has sacrificed the exchange value of this money, and is compensated for it in the form of interest. The initial amount of the borrowed funds (the present value) is less than the total amount of money paid to the lender.Present value calculations, and similarly future value calculations, are used to value loans, mortgages, annuities, sinking funds, perpetuities, bonds, and more. These calculations are used to make comparisons between cash flows that don’t occur at simultaneous times. The idea is much like algebra, where variable units must be consistent in order to compare or carry out addition and subtraction; time dates must be consistent in order to make comparisons between values or carry out simple calculations. When deciding between projects in which to invest, the choice can be made by comparing respective present values of such projects by means of discounting the expected income streams at the corresponding project interest rate, or rate of return. The project with the highest present value, i.e. that is most valuable today, should be chosen.
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