Question

describe the Time Value of Money (TVM) concept with an example in your own words and...

describe the Time Value of Money (TVM) concept with an example in your own words and explain why it is important to investors.

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Time Value of Money is a concept that the money today is worth more than the same amount of money.

The formula for TVM is:

PV = FV/((1+r)^n)

  • FV = Future value of money
  • PV = Present value of money
  • r = interest rate
  • n = number of compounding periods

For Ex- You have an option of receiving $100 today or after an year. You know that the return on savings account is 10%

$100/(1+10%) = $90.90

So, you will definitely prefer receiving $100 today.

This concept is important to investors because it helps them in making informed decisions and help them understand which is a better option based on interest, inflation, risk and return.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Explain in your own words and example of how a business could use the Time Value...
Explain in your own words and example of how a business could use the Time Value of Money concepts we covered this week.
Explain the concept of time value of money, including compounding and discounting. Consider how time value...
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...
In your own words, explain the three dimensional, time-independent Schrödinger equation. In your own words, describe...
In your own words, explain the three dimensional, time-independent Schrödinger equation. In your own words, describe the atomic structure of hydrogen atom. In your own words, explain nuclear binding energy and structure. In your own words, explain nuclear reactions, nuclear fission and nuclear fusion. please type it do not write it please
"Time Value of Money " The time value of money is a critical concept to understand...
"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....
Describe in your own words Seligman’s Preparedness Theory. Give your own example of how this would...
Describe in your own words Seligman’s Preparedness Theory. Give your own example of how this would manifest in a human.
Explain, in your own words, the concept of a “ natural rate” of unemployment.
Explain, in your own words, the concept of a “ natural rate” of unemployment.
First, explain in your own words the concept of displacement. Second, explain why it may justify...
First, explain in your own words the concept of displacement. Second, explain why it may justify non-maximal sanctions.
When it comes to the Time Value of Money (TVM), which of the following is considered...
When it comes to the Time Value of Money (TVM), which of the following is considered to be the "Gold Standard?" Internal Rate of Return (IRR). Net Present Value (NPV). Quick Ratio. Discounted Payback Period
Concept: "The Relevance of Market Values over Book Values” The student’s understanding (in own words) of...
Concept: "The Relevance of Market Values over Book Values” The student’s understanding (in own words) of the concept/principle: A practical example illustrating the concept/principle: The rationale or reason why the concept is important in economics: What two (2) critical assumptions underlie the concept/principle? Provide two (2) critiques or counters of the assumptions outlined above..
Describe in your own words the anatomical structure of the spinal cord. For example, you can...
Describe in your own words the anatomical structure of the spinal cord. For example, you can describe how the gray and white matter are oriented in the spinal cord.
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT