tvmtmln - TIME VALUE MONEY - TIMELINE VISUALZATION &...

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tvmtmln.doc Written by Professor Gregory M. Burbage, MBA, CPA, CMA, CFM Please observe all copyright laws Time Value Money (TVM) problems, also known as Present and Future Value problems, are where cash is received or paid at various times with the goal being to restate all the cash flows into one particular time period equivalency. Our basic assumption is that cash today can be invested and as a result will grow to a larger sum later (future value problems). Therefore the reverse is also assumed. Cash at later dates is equal to the cash invested earlier plus interest, therefore, in order to restate the future cash flows into earlier cash equivalents the interest portion must be taken out (present value problems). n = 3 i = 1 0 % t a b l e f a c t o r Timeline visualization: table factor is always 1000 FvAmt |---------------------|---------------------|---------------------|? 1.3310 > 1.000 1000 1000 1000 FvAo |---------------------|---------------------|---------------------|? 3.3100
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This note was uploaded on 12/14/2010 for the course BUS 3103 taught by Professor Nugent during the Spring '09 term at Texas Woman's University.

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