Question

Examine the concept of the time value of money in relation to corporate managers. What are two methods in which time value of money can help corporate managers in general?

Answer #1

**solution :**

1) The time value of cash intimates that payment obtained at
various points of time has a separate value. Corporate
administrators must regularly focus on maximizing shareholder's
money. Maximizing the shareholder's money mainly depends on the
time worth of cash flows from investment options.

2) Following 2 ways in time value of money can help corporate
administrators in common:

a) NPV (Net present value) : It is necessary to determine whether
the investment is ethical or not. Corporate administrators can
analyze alternative investments on discover their largest
NPV.

b) IRR (Internal rate of return) : IRR realizes the time value
money and uses cash flows. This arrangement is fair & clear. A
higher internal rate of return improves the manager to determine
it's investment options.

Examine the concept of time value of money in relation to
corporate managers. Propose two methods in which time value of
money can help corporate managers in general.

"Time Value of Money "
The time value of money is a critical concept to understand in
accounting, especially when dealing with loans, investment
analysis, and capital budgeting decisions. The time value of money
concept can be used to decide which projects to start and what
investments to make. You can also utilize the time value of money
concept in your personal life.
Provide two (2) decisions you may need to make
that could involve the time value of money....

What is the concept of time value of money?

how can the "time value of money" concept affect the valuation
of liabilities?
For example, how can this concept be used to determine the price
of bond?
In contrast, how can it be used to help us plan for a specific
goal (e.g., purchase of a car, home, or retirement)?

Explain the concept of time value of money, including
compounding and discounting. Consider how time value of money
applies to your personal life by addressing the following:
Describe at least one specific personal situation in the past
where the use of time value of money concepts would have helped you
make a better decision. Explain how time value of money applies to
this situation.
Describe at least one specific personal situation that you
expect to encounter in the future where...

The two capital investment evaluation methods that consider the
time value of money concept are: a.the net present value method and
the average rate of return method. b.the cash payback method and
the net present value method. c.the average rate of return method
and the cash payback method. d.the internal rate of return method
and the net present value method.

Why is it important for business managers to be familiar with
the time value of money concepts?
Why do we say money has time value?

How can a corporation best take advantage of the concept of the
time value of money?

How can a corporation best take advantage of the concept of the
time value of money?

Explain the time value of money concept. What is meant by
the effective interest rate. How are time value of money concepts
applied to accounting applications in determining the present value
of expected cash flows and in valuing bonds?

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