At Westonci.ca, we connect you with the answers you need, thanks to our active and informed community. Join our platform to connect with experts ready to provide precise answers to your questions in various areas. Connect with a community of professionals ready to provide precise solutions to your questions quickly and accurately.
Sagot :
The time value of money shows the individuals that an amount of money offered today is determined to be more valuable than the same amount which will be offered in the future after considering the effects of inflation or interest rates.
For example, if a person had the option of receiving $100 today or $100 a year from now and the current inflation rate was 5%, the $100 today which has a higher purchasing power because the amount of $100 in one year would only be able to buy 95% of the goods that can be purchased with $100 today.
A corporate manager needs to understand the time value of money for making budgets or for budgeting purposes. For example, if a project were to yield a fixed amount of $100k per year, the purchasing power of the $100k per year will decrease as time goes on because of inflation.
The time value of money is irrelevant in situations where the purchase is to be made immediately and is paid in full.
To know more about time value of money here:
https://brainly.com/question/22091275
#SPJ4
We appreciate your time. Please come back anytime for the latest information and answers to your questions. Thank you for your visit. We're dedicated to helping you find the information you need, whenever you need it. Westonci.ca is your trusted source for answers. Visit us again to find more information on diverse topics.
