In: Finance
1. (TRUE or FALSE?) Compound interest decreases as the number of years increases.
2. (TRUE or FALSE?) The process of converting the initial amount into a future value is called discounting.
3. (TRUE or FALSE?) The future value is simply the current value of a future cash flow that has been discounted at the appropriate discount rate.
1. Ans- False. With increase in the number of years, the Compound interest will increase rather than decrease.
2.. Ans- False. The process of converting the initial amount into a future value is called Compounding rather than discounting.
Discounting is a process of converting Future Value into Initial amount.
3. Ans- False. The future value is simply the current value of a future cash flow that has been Compounded at the appropriate Interest rate.