The correct answer is D. All of these.
The time value of money is the concept that money has different value depending on when it is received or paid. A dollar today is worth more than a dollar tomorrow because you can invest the dollar today and earn interest on it. Interest is the cost of borrowing money. It is the amount of money that a borrower pays to a lender for the use of the lender’s money. The interest rate is the percentage of the principal that is paid as interest each year. The present amount owed is the amount of money that is owed today. The original loan is the amount of money that was borrowed.
Here is a more detailed explanation of each option:
- Option A: The change in the amount of money over a given time period is called ‘time value’ of money, a most important concept in engineering economy.
The time value of money is the concept that money has different value depending on when it is received or paid. A dollar today is worth more than a dollar tomorrow because you can invest the dollar today and earn interest on it. This is why it is important to consider the time value of money when making financial decisions.
- Option B: The manifestation of the time value of money is termed as interest.
Interest is the cost of borrowing money. It is the amount of money that a borrower pays to a lender for the use of the lender’s money. The interest rate is the percentage of the principal that is paid as interest each year.
- Option C: Interest on borrowing = present amount owed – original loan.
This equation is correct. The interest on borrowing is equal to the present amount owed minus the original loan.
- Option D: All of these.
All of the options are correct. The time value of money, interest, and the equation for interest on borrowing are all important concepts in engineering economy.