How might you use the principles of the time value of money to your financial benefit?
Time value of money assits in ascertining the most profitable activity amongst choice of investment.
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(a) list various financial applications of the time value of money. (b) Explain the components of a discount/ interest rate
Time Value of Money or TVM is a concept that is used in all aspects of finance including: 1. Bond valuation 2. Stock valuation 3. Accept/reject decisions for project manage…ment 4. Financial analysis of firms 5. And many others.
Time Value of Money . Time Value of Money is an important concept in financial management. It is one of the important tools used in project appraisals to compare various inve…stment alternatives, and solve problems involved in loans, mortgages, leases, savings, and annuities.. A key concept behind Time Value of Money is that a single sum of money or a series of equal, evenly spaced payments or receipts promised in the future, can be converted to an equivalent value today. Conversely, you can determine the value to which a single sum or a series of future payments will grow to at some future date. The former is called Present Value of Cash Flows and the later is called Future Value of Cash Flows.
Managers might use the grapevine to their benefit in order to findout about any employee dissatisfaction. They can also find outabout potential problems that are occurring in …areas of thecompany.
The six values and principles of United States Democracy are:. - Government is limited, using methods such as Checks and Balances, Seperation of powers. - People have the ri…ght to change or do away with or form a new government. - People consent to what is takes place in the government. - Each individual has certain rights and freedoms. - Majority makes decisions but has to protect minority. - Everyone is equal under the law
Fossil fuels benefits include relatively easy to access, reliable,and abundance. Unlike some of the alternatives, fossil fuels arenot weather dependent.
Equipment purchase or new product decision, Present value of a contract providing future payments, Future worth of an investment, Regular payment necessary to provide a future… sum, Regular payment necessary to amortize a loan, Determination of return on an investment, Determination of the value of a bond.
Papyrus was used to make paper in ancient Egypt. The papyrus wasvery valuable because it allowed the people of Egypt to keeprecords and write down histories.
what is an example of a financal measure that an external user might use
One of the benefits is that the plants almost never experience problems and it only takes a few people to run the plants. There are several inherent design problems: . the …plants are designed to produce plutonium for nuclear weapons as a side product . the plants are fuelled by relatively rare uranium rather than the more abundant thorium leading to an eventual fuel shortage due to problem above . due to the use of uranium as the fuel the plants can meltdown unlike thorium reactors which just "die" when problems are encountered
The time value of money is one of the corner stones of finance. It states that a dollar now is worth more compared to dollar later in time. And if you think about it, it is co…rrect. Here is why: Imagine two situations: - you have a $1000 now in your pocket - you will receive $1000 in one year Lets say that you do NOT need the $1000 now or later; however you would like to have them. Now, if you had the money in your pocket today and you don't need them, what you can do is to invest them in the back and maybe you can earn couple of % interest on them (this will at least help you negate the effects of inflation). However, if you are to receive the money in one year, you will have to pass on the opportunity to invest and make some interest on them. Moreover, when you receive the money next year, they will be a $1000; however their buying power will be slightly less thanks to inflation. So to summarize - money now are worth more because they are at your disposal and they can earn you interest. Money later earn you no interest and suffer from inflation (alright, they gain from deflation too; however money in the bank do that too). This is a simple example but you can imagine in different terms - lets say a company receiving money to pay off debt today rather in a month, thus saving some interest costs.
bonds valuation is the TVM concept used to measure the carring value of investments in bonds.
The importance of time value of money in financial decision makingis because money in your today is worth more than the sum at afuture date. If you take the money you have tod…ay and invest it,you will have more money in the future than if you wait to take themoney.
ratio may be used for planning their own business
Investing in a fidelity municipal money market reaps many financial benefits. The longterm benefits greatly outweigh the short term costs as long as you are financially respon…sible about your decision.