Do financial managers need to know time value of money?
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To what extent is it important for financial managers to understand the concept of time value of money? Why? Please explain your reasoning in three paragraphs.
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This solution is 297 words and gives an example of how the time value of money concepts help managers made important decisions.
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To what extent is it important for financial managers to understand the concept of time value of money? Why?
The time value of money means that money now is more valuable than money later. That is, the timing of cash flows matters. Money received now can be invested at some rate of interest so that is grows. If you don't get the money until later, you cannot yet start that growing process. It is the "opportunity" to earn interest on today's dollars that give it more value that future promised ...
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