Week 8 Time Value of Money FIN200

Week 8 Time Value of Money FIN200 - Time Value of Money 1...

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Time Value of Money Time Value of Money Gregory Mann Axia College of University of Phoenix FIN 200 1
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Time Value of Money Present Value is the worth of the amount of money or source of cash flow that is determined by making a deposit on a specific present date at a specific determined interest rate. If you desire to know what the worth in the future is compared to the worth today, present value is the value of money concept to apply. This time value of money concept is equal to the current worth or present value equaling the future value minus the interest that will be earned on the account. This concept is useful in determining if the consumer wanted to spend the money or save it and invest. In today’s economic society an example would be: Say I wanted to have $1,000,000 after 10 years, how much should do I need to have to deposit and what interest rate would be required. Future Value is the amount of the present value plus what that deposit earns you from interest. The future value is determined at a given interest rate
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Week 8 Time Value of Money FIN200 - Time Value of Money 1...

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