Question

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In few sentences, please describe the role the time value of money has played in a recent personal or professional financial decision you have made, (As I work in a restaurant as a supervisor) . explain in 180 - 200 words

Answer 1

The time value of money is the greater benefit of receiving money now rather than an identical sum later. It is founded on time preference. So it is very important to recieve and pay the money with in time. Because the longer we go the value of money also declining. For example if I am a Restaurant owner and I invest $100 (the present value) for 1 year at a 5% interest rate for buying some fixed assets like table, glass,plates etc and then at the end of the year,I would have $105 (the future value). So, according to this example, $100 today is worth $105 a year from today. So there is a big change in the value of money. I should invest the money today because I will not get enough value for the same in the future. So as a restaurant owner I always keep fixed assets in the restaurant because those have values and those are initial investments.

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