Answered: Investor A needs $1,000 in 4 years.…

Investor A needs $1,000 in 4 years. Investor B needs $1,000 in 5 years. Who needs to deposit more money today to reach their goal? Select one: a. B b. A=B c. A

Personal Finance

13th Edition

ISBN:9781337669214

Author:GARMAN

Publisher:GARMAN

Chapter13: Investment Fundamentals

Section: Chapter Questions

Problem 2DTM

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Question

Investor A needs $1,000 in 4 years. Investor B needs $1,000 in 5 years. Who needs to deposit more money today to reach their goal?

Select one:

A=B

Expert Solution

Step 1

Time value of money concept says that a dollar amount invested today will have more value in future, like in 1 year, in 3 years or in 5 years. This is due to amount of interest earned or gained during the period.

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