question archive Explain in words why a dollar has different values dependent on point in time received, and how “present valuing” or “future valuing” cash-flows corrects for these differences

Explain in words why a dollar has different values dependent on point in time received, and how “present valuing” or “future valuing” cash-flows corrects for these differences

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Explain in words why a dollar has different values dependent on point in time received, and how “present valuing” or “future valuing” cash-flows corrects for these differences. Also, look at the mathematics of the “annuity” versus the “annuity due”, and explain why the annuity is 1+r more valuable. Finally, create an amortization table using your calculator (like in the notes) and explain why the amount of interest paid is decreasing, and the principle paid is increasing.

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