.7312 for a present value of $1 means that a certain rate of interest for a certain period of time it will be equal to what

Question

jamesj · Answer

It means PV of $1 at some particular time in the future = $0.7312

PV of $1 at time t at a discount rate of r is given by
$$ PV($1) = \frac{1}{(1+r)^t} $$

anonymous · Answer

ok but whats the answer

jamesj · Answer

I thought I answered your question.  Ask it again in the best English you have, or even better, copy it from the book.

anonymous · Answer

i need to know if it will equal $1, over 1$, less than $1, or never equal

jamesj · Answer

If the present value of $1 for some period and interest rate is .7312, then of course
0.7312 < 1

jamesj · Answer

In fact, for any rate of interest any time period $ t \geq 1 $, it is the case that
$$ 1 > PV(1) = \frac{1}{(1+r)^t} $$

jamesj · Answer

This is the mathematical expression of a really important fact in finance: a dollar today is worth more than a dollar in the future.