Time Value of Money

magazine Value of Money: OverviewTime survey of bills is the concept that ?an summation of silver in one?s possession is shoot down much than that same amount of property promised in the coming(prenominal).? (Garrison, 2006) This reservoir leave alone explain how annuities affect succession value of cash (TVM) and investment funds outcomes. ?Today capital back end be invested to relieve oneself entertain and therefore will be worth more in the in store(predicate).? (Brealey, Myers, &type A; Marcus, 2004) In addition, this paper will curtly address the impact of displace and interest rates, present value, future tense value, opportunity appeal and the impact interest has on money being borrowed. Time Value of MoneyPresent value is a genuine amount of money that is equivalent to a future stipend or series of payments that has been discounted by an appropriate interest rate. The future amount provoke be a single sum that will be drived at the end of the s tick out period, as a series of equally spaced payments (an annuity), or both. Since money has time value, ?the present value of a promised future amount is worth less the longer you have to conceal to receive it.? (Gallager&Andrew, 1996)Future ValueFuture value is the amount of money that an investment with a fixed, compounded interest rate will ascend into by some future date. The investment can be a single sum deposited at the beginning of the prototypic period, a series of equally spaced payments (an annuity), or both. Since money has time value, it is logically expected that the future value will be greater than the present value. ?The difference between the 2 depends on the number of compounding periods involved and the going interest rate.? (Gallager&Andrew, 1996) An annuity is a number of repeated payments or expediency in the same amount. Researchers propose that the annuity set pass along at the end... If you want to ge t a abundant essay, ordering it on our web! site: BestEssayCheap.com

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