FIN 320 Week 4 Individual Assignment Utilizing the Time Value of Money (TVM) Simulation Summary

Apr 24th, 2015
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FIN 320 Week 4 Individual Assignment Utilizing the Time Value of Money (TVM) Simulation Summary

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Running head: UTILIZING THE TVMUtilizing the TVMUniversity of PhoenixUtilizing the TVMThe concept of time value of money is one that business must apply in their everyday decision making process. An organization may be faced with various options, while all my be profitable, knowing which to choose can be a valuable asset. Often times an organization must embark on the difficult task of prioritizing the opportunities it has available. Yet, there are different capital budgeting techniques and knowing which one to use can often be the difference. Companies that are evaluating the potential of a long-term project are likely to analyze the capital required for the project and the possible cash inflows or net income from the project. There are various methods that can be used in capital budgeting, such as: payback technique, net present value, internal rate of return, and annual rate of return. Payback technique deals with the time associated with recovering the initial investment, "This concept can also be explained as the length of time it takes the project to generate cash equal to the investment and pay the company back" (Cliffs Notes, n.d., 3). The net present v

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