You may not know it , but you are surrounded by the concepts of present value and
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Question:
You may not know it but you are surrounded by the concepts of present value and future value in many areas of your life, such as education, marriagefamily retirement, and other such life goals. These time value of money concepts are important not only in corporate finance but in personal finance as well.
One tactic for learning new concepts is to apply them in situations in which you are familiar. Understanding present and future value will give you insight in the areas of retirementfinancial planning via the use of future value, otherwise known as compounding. That is will you have enough assets accumulated by retirement age so you will not outlive your nest egg? This is personal finance. In corporate finance, selection of investment projects incorporates present value concepts, also known as discounting. These concepts will be employed in most of the remaining assignments in this course.
For this post, suppose that your brother has landed his dream job. He now has substantive disposable income. Some of his friends are buying houses and cars, investing in bitcoin, and flipping apartments, and they have advised him to do likewise.
With your knowledge of the present and future value of money, what advice will you give to your brother on how he can utilize his disposable income to give him the most net worth by retirement?
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