What are some practical uses of present and future values?
What will be an ideal response?
Answer: There are basically two practical uses for these values. Present values will tell you how much must be saved or invested annually to achieve a future financial goal. It also works for determining the monthly payment on a loan of a specified amount to be paid back in the future. Future values show the total future accumulated values of specified sums of money saved or invested now and into the future. Budgeting and financial planning would be very difficult if not impossible without the time value of money skills.
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Exchanges of plant assets that have commercial substance require any gain or loss on the transaction to be recognized
Indicate whether the statement is true or false
Which of the following does not apply to secondary markets?
A. Transactions are important to the efficient allocation of resources in our economy. B. New resources are provided when shares of stock are sold by the corporation to the initial owners. C. Transactions help to establish market prices for additional shares that may be issued in the future. D. Many investors might be unwilling to provide resources to corporations if there is no available mechanism for the future sale of their stocks and bonds to others.