Purpose of the Report The purpose of this report is to discuss the time value of money, and illustrate that I understand the concept. First, there will be an explanation of the key concepts of time value of money, including why it is important to know what these concepts are and how they are applied to the real world. The report will also contain several calculations made using present and future value tables. The calculations illustrate that not only do I understand the concepts but that I can apply them to mathematical computations. 1. The time value of money is a concept that reflects that money changes value over time. The primary factor that causes this change is inflation. Essentially, as the result of inflation money received in the future is not worth as much as money received today (Carther, 2012). Simply, one cannot buy as much with a future dollar as one can buy with a dollar today. The time value of money concept is applied to finance to allow people to gain a more accurate reflection of the value of future cash flows. 2. It is important for financial managers to understand the concept of the time value of money. There are a few reasons for this. The first is that financial planners deal with future cash flows. These include things like interest-bearing investments, but also the future value of accounts that their customers will have. It is imperative that financial planners have a good sense of how their strategies will affect their customers, and
1. Describe two examples of important things that financial planning skills can help you do, and explain why
It is worth more this year rather than next year because if you receive it this year and you decide to invest in it you will gain interest on the thousand dollars you received this year. It illustrates the concept of interest. It is important for firms because it benefits them in terms of long term investment.
In the article “Money: The Real Truth about Money” by Gregg Easterbrook published In Time Magazine (2005), the author compares two different generation’s attitudes towards money, and how it affects their happiness. The author’s standing qualifies him to write and appeal this issue, he’s a contributing editor of The Atlantic and The Washington Monthly, and he also writes the Tuesday Morning Quarterback column for ESPN.com. Easterbrook’s primary audience appears to be middle class Americans however he draws a wider secondary audience’s attention. The author succeeded in convincing his readers through his rhetorical appeals, credible sources and his clever use of language.
Throughout our lives, we have moments that may impact us negatively and/or positively. In the short story “the money” by Junot Diaz we see his mother saving money to send to her parents in the Dominican Republic but his family is already in a struggle to survive. Then there was a turning point for the whole family, they were robbed. Diaz’s mother was enraged by the event “she cursed the neighborhood, she cursed the country, she cursed [his] father, and of course, she cursed [the] kids,” assuming that one of Diaz’s friends or his siblings’ friends had something to do with it (Diaz 3). Diaz suspected one of his friends and he was right. So, he then took it into his own hands and went to steal the money back. Once Diaz retrieved the money, he
1. Describe two examples of important things that financial planning skills can help you do, and explain why these things are important to you personally. (4-6 sentences. 2.0 points)
1. Describe two examples of important things that financial planning skills can help you do, and explain why these things are important to you personally. (4-6 sentences. 2.0 points)
Second, financial managers use economic principles to guide them in making financial decisions that are in the best interest of the firm. In other words, finance is an applied area of economics that relies on accounting for input.
According to Douglas, "a dollar received in the present period is worth more than a dollar received in a future period" (2010, ch. 1.4). The reasoning behind this is that an amount received today can be deposited into a bank and earn interest. Therefore an amount received in a year, for example, is valued less today, and conversely, an amount received today is valued to be more
The wealth management or financial planning professions provide financial planning services and investment advice to clients for high net profit. The essential goal of any financial profession is to sustain and increase the long-term wealth of their clients. Since they manage huge amount of money for other people, they must also be ethical, trustworthy and free of any criminal record involving robbery, fraud or intentional mismanagement. Thus, they should understand complex financial documents, financial regulations and legal restrictions, not only good command of investments and financial planning.
To be successful it is important to look ahead to the future. The future is very important to thing about for many reasons. To be well off in the future its good to know about money, and what a person does with it. People should put it in retirement plans and such things because a person has to think to their self if they want to live comfortably like they do now.
1. Describe two examples of important things that financial planning skills can help you do, and explain why these things are important to you personally. (4-6 sentences. 2.0 points)
There is nothing as influential and powerful as the concept of money. As a medium for exchange, money is value given or received in exchange for anything of value. Because money stands in place for value, why is it that gold has been the scale for evaluating money throughout history? Ted Cruz, in a Republican Presidential Debate, answered a question regarding monetary policy. He thinks “the Fed should get out of the business of trying to juice our economy and simply be focused on sound money and monetary stability, ideally tied to gold” (Cruz 2015). Cruz aligns “sound money” to gold because gold stabilizes pricing and reduces inflation percentages over the long run. The problem with
This is equally true that money is subject to depreciation, despite its function as a storability of value and as standard for deferred payment in the future. The same goes for the cost-benefit and the impact a fall in value of money will have on the profitability and viability of a project on the long run. Even if the estimated earnings from a project was realized in terms of money, the viability of the project will depend on the net present value of the money earned on the short run compared to its value on the long run when the project wounded up in the future.
You might actuallybe gratified by the product/service you're procuring, but there's no reason to pay wanton extras or be burdened with appended purchases. If you just attend to bills presented to you without giving much thought to the itemized charges, you might be paying for things you’re not even aware of.
The Super Project presented General Foods management with the possibility to introduce a new dessert product, named Super, into the market. The dilemma management faced was how to appropriately measure and allocate costs associated with the project, as well as, whether to accept or reject the project based on costs and future cash flows generated by Super. With regard to The Super Project or any capital budgeting decision, time value of money concepts are central to financial