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##### Why do we say money has time value?

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**Question**

Why do we say money has time value?;2. Why is it important for business managers to be familiar with time value of money concepts?;3. Define Present Value.;4. Define Future Value.;5. What are present value and future value interest factors? (as in PVIF and FVIF);6. (Calculating future value) You buy a 6 year, 8% CD for $1,000. Interest is compounded annually. How much is it worth at maturity?;7. (Calculating present value) What's the present value of $1,000 to be received in 8 years? (Your required rate of return is 7% a year.);8. (Calculating the rate of return) A friend promises to pay you $600 two years from now if you loan him $500 today. What interest rate is your friend offering you?;9. (Calculating the future value of an annuity) If you invest $100 a year for 20 years at 7% annual interest, how much will you have at the end of the 20th year?;10. (Calculating the present value of an annuity) How much would you be willing to pay today for an investment that pays $800 a year at the end of the next 6 years? (Your required rate of return is 5% a year.)

Paper#33719 | Written in 18-Jul-2015

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