Reference no: EM132740603

Financial managers and investors are always confronted with opportunities to earn positive rates of return on their funds, whether through investment in attractive projects or in interest-bearing securities or deposits. Therefore, the timing of cash outflows and inflows has important economic consequences, which financial managers explicitly recognize as the time value of money. Time value is based on the belief that a peso today is worth more than a peso that will be received at some future date. We begin our study of time value in finance by considering the two views of time value-future value and present value, the computational tools used to streamline time value calculations, and the basic patterns of cash flow.

• In short, the Time Value of Money is one of the most important concepts in finance. This principle in finance emphasizes that the value of cash a business have today is more valuable than future payments because the money it now has can be invested and earn positive returns.

Problem 1: What have you realized and learned from the Learning Task 1?

Problem 2: For what reason why time value of money principle tells us that the value of your 1 peso today is valuable than your 1 peso in the future. Explain your answer.