The principal of the time value of money is probably the single most important concept in financial management. One of the most frequently encountered applications involves the calculation of a future value. The process for converting present values into future values is calledcompounding . This process requires knowledge of the values of three of four time-value-of-money variables. Which of the following is not one of these variables? The duration of the investment (N) The present value (PV) of the amount invested The inflation rate indicating the change in average prices The interest rate (I) that could be earned by invested funds

Respuesta :

Answer: The inflation rate that indicates the change in average prices

Explanation: The option that is probably not included in the options is the inflation rate that indicates the change in average prices, this because the constant present value of the amount invested to know how much we would pay for this good at this time but if we want to know the future value, we must know is the interest rate that could obtain funds, which is why we should have as a return in exchange for investing in this good and finally we could know the time of the values ​​that we want to know, for example if we want to know how much it is the investment in four or five years, this variable helps us to bring the funds that through the interest rate will be worth our good within the indicated period.