Understanding Money and Its Value

What is the main idea behind the time value of money?

• Money loses value over time.

• Money has the same value over time.

• Money today is worth more than the same amount in the future.

• Money in the future is worth more than money today.

How is gratuity typically calculated for employees?

• Based on the number of years worked and last drawn salary.

• Based on the number of hours worked.

• Based on the number of projects completed.

• Based on the number of days worked.

What is a perpetuity?

• A one-time payment.

• A series of payments that continue forever.

• A payment that increases over time.

• A payment that decreases over time.

If the interest rate increases, what happens to the present value of a future sum of money?

• It increases.

• It decreases.

• It stays the same.

• It doubles.

What is the formula for calculating the future value of a single sum of money?

• An annuity

• A perpetuity

• A lump sum

• A gratuity

What is the effect of a higher interest rate on the future value of an investment?

• It decreases the future value.

• It increases the future value.

• It has no effect.

• It halves the future value.

Which of the following is an example of a gratuity?

• A bonus given for good performance.

• A retirement benefit based on years of service.

• A monthly salary.

• A commission on sales.