Question

Identify and discuss at least two ways you might be able to use the time value of money calculations in your personal life.

Answer 1

Example-1

suppose your bank offers you a CD with a two-year maturity, a stated annual interest rate of 8 percent compounded quarterly. You decide to invest $10,000. Then the CD be worth $ 11,716 .59 at maturity

Example-2

You plan to invest €20,000 per year in a stock index fund for the next 30 years. Historically, this fund has earned 9 percent per year on average. Assuming that you actually earn 9 percent a year, Money will you have available for retirement is €2,726,150.77