Description
Thank you in advance, please just follow the assessment instructions below. I have also included the overview to help with your understanding:
Overview
Respond to three questions and solve three computational problems about time value of money (TMV) as it applies to single cash flow.
Time value of money (TVM) is the foundation of mathematical finance. It is important to be able to demonstrate how the TVM concept can be applied to corporate finance, as well as to personal finances. It addition, knowing how to apply various technical terms used in finance, such as discount rate, present value, and future value, is a useful skill.
By successfully completing this assessment, you will demonstrate your proficiency in the following course competencies and assessment criteria:
- Competency 1: Evaluate the global financial environment.
- Calculate the future value of a savings account.
- Calculate the future value of an initial deposit.
- Calculate the annual rate of return on an investment that has increased in value over time.
- Competency 2: Define finance terminology and its application to within the business environment.
- Explain the concept of cash flow in corporate finance.
- Explain how present value and future value are related.
- Competency 3: Evaluate the financial health of an organization.
- Explain how present values are affected by changes in interest rates.
Assessment Instructions
Questions
Problems
Explanation & Answer
Attached.
Running head: TIME VALUE OF MONEY
1
Time Value of Money
Institution Affiliation
Date
TIME VALUE OF MONEY
2
The Concept of Cash Flow in Corporate Finance
Cash flow refers to the cash or any cash related transaction that move in and out of
corporate (Ehrhardt, & Brigham, 2016). Cash flow determination is essential to any business
since it shows the position as well as the performance of the company. When the opening cash is
lower than the closing cash amount, then this is referred to as positive cash flow. On the other
hand, when the closing cash is lower than the initial cash amount, this is called a negative cash
flow. For instance, a positive cash flow implies that the business is in apposition to either
reinvest or even acquire debt since the cash flow can be used as proof that the business is in a
position to reinvest. Also, the positive cash flows also show that the company can pay back the
shareholders and also pay the expenses incurred.
In a situation whether a n...