Description
Topic: 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.
- 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.
- If you have not used TVM in the past financial transactions explain potential TVM applications you would encounter in future business or personal transactions.
Explanation & Answer
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Running Head: TVM
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Time Value of Money
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TVM
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Discussion- Time Value of Money
The time value for money (TVM) is a critical concept that the cash holding now has a
higher value than it would be in the future (Muda, I., & Hasibuan, 2017). Generally, money
utilized is considered to create a better value in the future hence creating a good capacity in
terms of the potential of multiplication after a good investment. Thus, the time value of money is
considered with the future value, present value, and the compounding interest.
TVM basis on the idea of that the difference money value that keeps on changing with
time. Generally, the value of $10 will be much lower in the future unless invested in creating
better value. An investment will be expected to create value through interest earned. For
i...