Time Value of Money
What is today's value of future net receipts?
Initial Outlay Year 1 Year 2 Year 3 Year 4 Year 5
Cash In $116,667 $206,000 $212,180 $218,545 $225,102
Cash Out TI's: ($180,000) Comm: ($ 82,710) OPEX: $85,000 $85,000 $85,000 $85,000 $85,000
Net Cash Flow ($262,710.00) $31,667 $121,000 127,180 133,545 140,102          
Today's Value (262,710.00)      28,788.18       100,000.00      95,552.22     86,992.32    91,213.03   $139,835.75 The present value of future net income; "NPV."
The future value of money invested is calculated by adding the present value and the interest earned (interest equals to present value times the rate of the interest, and is represented as a percentage). However, the future value of money may also work against us when for example we pay with credit cards and we have to pay it off with the money from the future plus interest expense.
Suppose that instead of receiving $1,000 we spent $1,000 by purchasing merchandise on a credit card. Note that a dollar today is worth more than a dollar tomorrow, so we will have lost money because we will need to pay off our credit card account

Time Value of Money
2124 Words  9 PagesTime Value of Money: Simple Interest versus Compound Interest Outline I. Applications of Time Value of Money 1.1 Example One 1.2 Example Two 2. Interest 2.1 What is Interest? 2.2 Three Variables of Interest 1. Principal 2. Interest Rate 3. Time 2.3 Why is Interest Charged? 3. Simple Interest 3.1 What is Simple Interest? 3.2 Simple Interest Formula 4. Compound Interest 4.1 What is Compound Interest? 4.2 Compound Interest Formula…

Essay on Time Value Of Money
1252 Words  6 PagesTime Value of Money The time value of money serves as the foundation of finance. The fact that a dollar today is worth more than a dollar in the future is the basis for investments and business growth. The future value of a dollar is based on the present dollar amount, interest rate and time period involved. Financial calculators and tables can assist in computing the future and present values, which eases the pain of the mathematically challenged. Yield or rate of return can also be calculated…

What Is Time Value of Money?
923 Words  4 PagesWhat is time value of money? The simple answer towards this question is that the same amount of money will have different value at different time. By this definition money is separated into its nominal value, which is the face amount, and the real value, which is the purchasing power of the money. The real reason here is that inflation exists, therefore when the price of a good goes up the same amount of money that was previously require to buy that good will not be able to buy that same good after…

Time Value Of Money Paper
1354 Words  6 PagesTime Value of Money Paper In order to understand how to deal with money the important idea to know is the time value of money. Time Value of Money (TVM) is the simple concept that a dollar that someone has now is worth more than the dollar that person will receive in the future, this is because the money that the person holds today is worth more because it can be invested and earn interest (Web Finance, Inc., 2007). The following paper will explain how annuities affect TVM problems and investment…

Time Value of Money and Present Value
1154 Words  5 Pagescollege 15 years from today and the other will begin 17 years from today. You estimate your children’s college expenses to be $23,000 per year per child, payable at the beginning of each school year. The annual interest rate is 5.5 percent. How much money must you deposit in account each year to fund your children’s education? Your deposits begin one year from today. You will make your last deposit when your oldest child enters college. Assume four years of college Solution: Cost of 1 year at…

Time Value of Money
2092 Words  9 PagesTime Value of Money The time value of money (TVM) or, discounted present value, is one of the basic concepts of finance and was developed by Leonardo Fibonacci in 1202. The time value of money (TVM) is based on the premise that one will prefer to receive a certain amount of money today than the same amount in the future, all else equal. As a result, when one deposits money in a bank account, one demands (and earns) interest. Money received today is more valuable than money received in the future…

Time Value of Money
3904 Words  16 PagesTime Value of Money Problems 1. What will a deposit of $4,500 at 10% compounded semiannually be worth if left in the bank for six years? a. $8,020.22 b. $7,959.55 c. $8,081.55 d. $8,181.55 2. What will a deposit of $4,500 at 7% annual interest be worth if left in the bank for nine years? a. $8,273.25 b. $8,385.78 c. $8,279.23 d. $7,723.25 3. What will a deposit of $4,500 at 12% compounded monthly be worth at the end of 10 years? a. $14,351.80 b. $14,851.80 c. $13,997.40 d. $14…

The Time Value of Money
875 Words  4 Pagesdiscuss 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…

Time Value of Money Essay
708 Words  3 PagesTime Value of Money Project Show all your work! Name _________________ 1. If Mrs. Beach wanted to invest a lump sum of money today to have $100,000 when she retired at 65 (she is 40 years old today) how much of a deposit would she have to make if the interest rate on the C.D. was 5%? a. What would Mrs. Beach have to deposit if she were to use high quality corporate bonds an earned an average rate of return of 7%. b. What would Mrs. Beach have to deposit if she…

Essay on Time Value Of Money
1655 Words  7 PagesTime Value of Money Time Value of Money To make itself as valuable as possible to stock holders; an enterprise must choose the best combination of decisions on investment, financing and dividends. In any economy in which firms have the time preference, the time value of money is an important concept. Stockholders will pay more for an investment that promises returns over years 1 to 5 than they will pay for an investment that promises identical returns for years 6 through 10. Essentially one…
More about Time Value of Money

Time Value of Money
2124 Words  9 Pages 
Essay on Time Value Of Money
1252 Words  6 Pages 
What Is Time Value of Money?
923 Words  4 Pages 
Time Value Of Money Paper
1354 Words  6 Pages 
Time Value of Money and Present Value
1154 Words  5 Pages 
Time Value of Money
2092 Words  9 Pages 
Time Value of Money
3904 Words  16 Pages 
The Time Value of Money
875 Words  4 Pages 
Time Value of Money Essay
708 Words  3 Pages 
Essay on Time Value Of Money
1655 Words  7 Pages