Time Value of Money

ASSIGNMENT ON $ succession economic entertain of Money $ What is quantify Value of specie or why silver has measure Value? wherefore Time Value of bills is considered important in do monetary decisions? Define: Present Value of money. Future Value of money. Annuity. Perpetual Annuity. Sinking Fund Factor. Capital Recovery Factor. [pic] [pic] 1. What is Time Value of money or why money has Time Value? Answer: Money received sooner earlier than later allows one to use the funds for investment or consumption purposes. This concept is referred to as the Time Value of money. If individual borrow money today then he must(prenominal) repay a larger amount in the forthcoming; because the interest will be added with the principal amount borrowed. The yield is that $100 in hand today I s worth more than $100 to be received a year from now. The reason is straight forward: A one dollar bill mark that someone received today can be invested such(prenominal) that he will have more than a dollar at some future time. That means we are acquire an interest on a particular amount of money in future by investing. This existence of interest in the economy system therefore provides money with its lever. [pic] 2. Why Time Value of money is considered important in making financial decisions?

One of the most fundamental concepts in finance is that money has a Time Value, that is to say that money in hand today is worth more than money that is judge to be received in the future. So, money is not innocent and can be downright expensive. The ability to make coincidence of cash flows that occurs over time is very useful for both(prenominal) business managers and individuals in making financial decisions. Time value of Money is one of the indispensable concept through which the ideal money market revolves. It is better understood that Re.1 today adds more value than Rs.10 tomorrow, since the prospective earnings is uncertain and risky. So, Time value of money concept helps to discount that uncertainty and give fortune for failures... If you want to get a full essay, order it on our website: Orderessay

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