Question

What are some potential problems that could arise if the time value of money is not...

What are some potential problems that could arise if the time value of money is not considered in financial decisions?

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Time value of money (TVM) considers two main thing i.e. interest rate and time period.

In case the time value of money is not considered in financial decisions, which means amount invested/hold today is worth the same in any future date.

Hence by not considering TVM, the potential problems are:

1. you ignore the interest rate which can be earned on today's investment.

2. Also, there is risk of not actually getting the amount in future. However, if you hold the amount today there is no risk involved.

3. There is inflation which is also not considered with time period.

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
What could be some potential problems when developing written job descriptions for call centre employees?
What could be some potential problems when developing written job descriptions for call centre employees?
"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 some of the problems that might arise from a failure to maintain and update an...
Describe some of the problems that might arise from a failure to maintain and update an existing chart of accounts
What are some things time value of money can be used for?
What are some things time value of money can be used for?
Time Value of Money, Practical Applications in Business and Personal Decisions If you have put money...
Time Value of Money, Practical Applications in Business and Personal Decisions If you have put money in a savings account, made monthly auto or mortgage payments, or paid down your student loan ahead of time you have inherently applied TVM. 1. Discuss how you may have used TVM in a recent investment or loan decision and explain some of the TVM details that may have been involved in your transaction. 2. If you have not used TVM in the past...
What are some potential problems for the current class of engineers recruited at DSI?
What are some potential problems for the current class of engineers recruited at DSI?
What are some potential problems caused by allocating all expenses to products?
What are some potential problems caused by allocating all expenses to products?
3. What are the current problems Handu is facing? Why did these problems arise?
3. What are the current problems Handu is facing? Why did these problems arise?
what are some problems related to money illusion ? ( macroeconomics) what can be a good...
what are some problems related to money illusion ? ( macroeconomics) what can be a good example to explain money illusion?
What are the problems that arise with the use of electronic health record.
What are the problems that arise with the use of electronic health record.
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT