The time value of money (TVM) is the idea that money available at the present time is worth more than the same amount in the future due to its potential earning capacity. This core principle of finance holds that, provided money can earn interest, any amount of money is worth more the sooner it is received. (Investopedia)

Meehan Construction is expected to receive $1,500,000 for a project that it has concluded at the end of the year. What is its present value, if the discount rate is 8%?
Suppose Mary wants to purchase an annuity that pays $10,000/year for the next 20 years. The interest rate on this annuity is 6%. How much will she have to pay now to secure such an annuity?
My rich uncle gave me RM 1,000,000 as gift, he restricted that I can only withdraw RM 100, 000 at the end of each year. Given I keep the money in a trust that give 8% interest. How long I can withdraw RM 100, 000 a year before the fund dries out.
Perpetuity means annuity that can last forever, find the perpetuity for the above-mentioned scenario.

Answer rating: 100% (QA)

i Pv FV1rn r interst rate 8 n number of periods 1 Amount to be recievd after 1 year 1500000 Present ... View the full answer