Time value analysis has many applications. For example, you use time value of money concepts in valuing stocks and bonds, establishing loan payment schedules, and deciding whether or not to invest in a new plant and/or equipment. As one of the more important topics in finance, time value of money underlies many other concepts covered in this course, so it is very important to not only understand the concept, but also to be able to compute time value of money problems that involve compounding and discounting skills. As you read through the examples in your readings, you might feel this is a very difficult topic. You may have difficulty relating to time value analysis because the context of the problems is presented in a textbook. Learning tends to be richer and long lasting when you can define your own problems and background contexts.

Think of four examples in your organization or from your personal life, or a combination of both, that demonstrate the following:

Present Value (PV) of a lump sum

Future Value (FV) of a lump sum

Present Value (PV) of an annuity

Future Value (FV) of an annuity

Explain your examples, including why they are relevant to your organization and/or personal life. Provide a rationale for interest or discount rates used in your examples.

Answer rating: 100% (QA)

Time value of money is a concept which has a lot of importance in each and every persons life Everyone invests money takes loans invests in stocks so ... View the full answer