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Time Val - Running head CHECKPOINT TIME VALUE OF MONEY...

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Running head: CHECKPOINT: TIME VALUE OF MONEY 1 Check Point: Time Value of Money Nikki Vergets Fin/200 5/19/2011 John Simulcik
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CHECKPOINT: TIME VALUE OF MONEY 2 Check Point: Time Value of Money There are four different concepts for time value money present value, present value annuity, future value and future value of annuity. Here is a description of each. Present Value: Present Value describes the process of determining what a cash flow to be received in the future is worth in today's dollars. Future flows get a discounted rate. (, 2002) Therefore, the Present Value of a future cash flow represents the amount of money today which, if invested at a particular interest rate, will grow to the amount of the future cash flow at that time in the future. Future cash flows are discounted at the discount rate, and the higher the discount rate, the lower the present value of the future cash flows. Calculations for present value, can also tell a business such things as how much money
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