Time Value of Money

Abstract In this paper, Team C leave discuss the opinion of the eon value of notes and the importance of this concept in business. Also, we will provide a demonstration of the use of the regulation used to calculate the present and future values of bills to brook the present value of $100 using incompatible periods of time and disport enjoins. Time Value of Money In the innovation of business, it is essential to know what TVM represents and how it helps make better choices in how we dribble our notes. TVM is also known as Time Value of money which is a given amount of interest earned in a period of time (Wikipedia, 2011). Each member in group C will use 100 as our present value and we will choose an interest rate and period. Time value of money concept is used to sympathise present and future values of money. The time value of money refers to the relationship between time, money, and the rate of interest. (Letsche, 2011). The formula consist of tetrad components FV = Future Value, PV = Present Value, i = the interestrate per period and n= the form of compounding periods (TeachMeFinance.com). In business, TVM is used to evaluate expected returns on investments and monitoring the companys cash flow.

However, understanding the time value of money is also very important for you as an self-employed business person to make sure you atomic number 18 able to realize your spending, purchasing and retirement goals. (Loughran, 2011). On a personal level, individuals can use TVM to calculate interest that will be paid on mortgages, car payments and individual loans. knowing how your money can work for you is important to personal financial success. When one considers the time value of money it is important to understand that a dollar can be invested and earn interest over time (Myers, 2011). Time value of money is a very important concept in the role of put money. This would be because, it explains the concept of compound returns, which causes investments to grow exponentially... If you want to get a full essay, order it on our website: Ordercustompaper.com

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