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Time value of money, future value and present value

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1. Your friend says, 'I just got out of an accounting lecture about future value and present value. Frankly, I don't have a clue what the professor was talking about, and we have a quiz on Wednesday. Help!'What would you tell your friend? How would you help him/her out? Clearly and concisely explain what is meant by the time value of money and what the terms future value and present value represent. Explain.

2. Your uncle offers you a choice of $20,000 in 50 years or $45 today. If money is discounted at 13 percent, which offer should you choose? Explain with details and computations. Suppose it is discounted at 10 percent, what will be your answer?

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1. Your friend says, 'I just got out of an accounting lecture about future value and present value. Frankly, I don't have a clue what the professor was talking about, and we have a quiz on Wednesday. Help!' What would you tell your friend? How would you help him/her out? Clearly and concisely explain what is meant by the time value of money and what the terms future value and present value represent. Explain

These issues are related to the time value of money. The basic idea of time value of money is that a dollar today is worth more than a dollar tomorrow. ...

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Response discusses the time value of money, future value and present value

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Similar Posting

Four questions using the time value of money concepts

1. Compute the time it takes to save $10,000 if you know you can save $300 per month in a bank account paying 10 percent interest.

2. Compute the amount of money you need to invest today to have a balance of $10,000 10 years from now in a bank account expected to earn 10 percent interest.

3. You are saving $300 per month in a 5% account and want to know how much you will have for retirement.

4. You take out a mortgage of $200,000 for your house at 4% for 30 years. You want to compute your monthly P&I payment (principal and interest).

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