Time value of money

# Time value of money - \$1000 dollars a month it will...

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Name: Georgia Moore Date: 04/08/2011 Assignment: Time Value of Money Time value of money concept Characteristics of time value When it would be used Present value The value on a given date of a future payment. It is discounted to reflect factors such as investment risks. It is used by businesses to provide a means to compare cash flows at different times. Present value of annuity The sum of the present value of each annuity payment. It is used to determine the annuity payments on a lottery winnings, It can be used to determine if a person can afford a loan. If a person can only pay
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Unformatted text preview: \$1000 dollars a month it will determine how much they can borrow. Future value The value of an amount that will grow at a certain interest rate over a period of time. This is used in retirement plans. People can use this to determine if the amount they have in their retirement plans will be enough when they retire. Future value of annuity This is the sum of the future value of each payment. A person can use this to determine how much money they will have after a period of time and their money is gaining an interest....
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