Time value of money is financial concept

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Time Value of Money.

Time value of money is a financial concept that illustrates how the value of money grows over time. This takes into consideration that the money can be invested at a specified interest rate, that grows. One financial concept is present value (PV) and another financial concept is future value (FV).

1. Discuss and show one example of how the present value formula is a good method to determine how much is needed to save monthly, in order to have a specified sum of money at retirement age in 25 years at 8% interest.

2. Discuss and show one example of how the future value formula is a good method to determine how much of a lump sum is needed today, to invest for 25 years to reach a specified retirement amount, with 8% interest.

Reference no: EM132513446

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