ABSTRACT
From the discussion on interest rate (Chapter 1), we can conclude that
$1,000 lent at a 12% rate for one year will earn $120 and will add to the original
$1,000 to total $1,120. Therefore, at a 12% interest rate, $1,000 is now the
equivalent of $1,120 a year from now and is called the present value of $1,120.
