Why this is mistaken
Why it fails
Currency unit alone does not make dated claims comparable. At a supplied positive rate, an amount available earlier can accumulate before the later date. Conversely, a later amount has a smaller equivalent at an earlier date.
Diagnostic and correction
Name the comparison date. If the answer is missing, draw a timeline, choose one supported valuation date, translate every amount to that date with aligned units, and retain the assumptions beside the result.
Where to watch
When this mistake may appear
- Two alternatives show the same dollar amount at different dates.
- A later payment is described as equal without a valuation date or rate.
Check your work
Your work may contain this mistake if:
- Selects either amount as equivalent because the nominal dollars match.
- Compares a present value with a future value without translating one to the other's date.