Describes the concept of time value of money, Financial Management

Assignment Help:

Q. Describes the Concept of Time value of Money?

'Time value of money' signifies that the value of a unit of money is different in different time periods. The worth of a sum of money received today is more than its value received after some time. On the contrary the sum of money received in future is less precious than it is today. Alternatively the present worth of a rupee received after some time will be less than a rupee received today. The time value of money can as well be referred to as time preference for money.

Three reasons perhaps attributed to the individual's time preference for money.

  • Risk
  • Preference for consumption
  • Investment opportunities

We live under risk or else uncertainty. As an individual isn't certain about future cash receipts he or she prefers receiving cash now. Most people have slanted preference consumption over future consumption of goods and service either for the reason that of the urgency of their present wants or because of the risk isn't being in a position to enjoy future consumption that perhaps caused by illness or death Or because of inflation.


Related Discussions:- Describes the concept of time value of money

Conversion privilege, In convertible bonds, bondholders get a right t...

In convertible bonds, bondholders get a right to convert their bonds for a specific number of shares of the bond issuer. This privilege allows bondholders to take

Example on walters dividend model, Q. Example on Walters dividend model? ...

Q. Example on Walters dividend model? Example: - The following information is obtainable in respect of a firm: Capitalisation Rate (Ke)                     = 10% Earning

Challenges facing by the finance manager, FUNCTIONS / RESPONSIBILITIES / CH...

FUNCTIONS / RESPONSIBILITIES / CHALLENGES FACING THE FINANCE MANAGER Today's finance manager is facing a lot of challenges, which are the direct result of the dynamic growth in

Define policy formulation - accounts receivable management, Q. Define Polic...

Q. Define Policy formulation - accounts receivable management This is concerned with set up the framework within which management of accounts receivable in an individual compan

Differences in working capital for different industries, Differences in wor...

Differences in working capital for different industries   Manufacturing Retail Service Inventories H

What is risk adjusted discount rate, Q. What is risk adjusted discount rate...

Q. What is risk adjusted discount rate? The risk adjusted discount rate includes two rates viz (i) Risk-free rate: - Risk free rate is the usual rate or the usual discount r

Walters model, A Ltd sells goods at Rs.10.P.U. Its variable cost Rs.7.P.U a...

A Ltd sells goods at Rs.10.P.U. Its variable cost Rs.7.P.U and fixed cost amount to Rs.1,70,000 it finances all its assets by equity funds. It pays 40% tax on its income. Z Ltd is

Lockbox system, how do we compute for benefits can derrive out of using loc...

how do we compute for benefits can derrive out of using lockbox system?

Caselet, 1.How would you judge the potential profit of Bajaj Electronics on...

1.How would you judge the potential profit of Bajaj Electronics on the first year of sales to Booth Plastics and give your views to increase the profit? 2. Suggestion regarding C

Discuss how a firm can maintain adequate working capital, Question1 Analys...

Question1 Analyse the financial requirements of a FMCG company Question2 If you are an investor and are interested in finding out the value of an amount of Rs 10,000 to be re

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd