The time value of money sits at the heart of all valuations. Whether you are trying to
Question:
The time value of money sits at the heart of all valuations. Whether you are trying to calculate the price of a company's share, the value of a loan, the value of a whole business, or any other item of financial value, you need the time value of money because the maximum value of anything (in a financial sense) is the total present value of all future cash flows it gives you. If you are not trying to buy or value a business but are trying to run that business, the value of whatever you are trying to do inside the business depends on the time value of money.
Please explain the item listed below
1. Present value of annuity vs. present value of annuity due
2. Future value of annuity vs. future value of annuity due
3. The effect of increasing the discount rate (r) on the present value and the future value
4. The effect of increasing the number of periods (N) on the present
Foundations of Financial Management
ISBN: 978-1259024979
10th Canadian edition
Authors: Stanley Block, Geoffrey Hirt, Bartley Danielsen, Doug Short, Michael Perretta