Explain why money has a time value|Quick homework help

Posted: February 16th, 2023

Unit II Journal

Instructions

Explain why money has a time value. Explain how the time value of money (TVM) might possibly impact your life now or in the future. Give an example, from your own experiences if possible, to support your explanation.

Your journal entry must be at least 200 words in length. No references or citations are necessary.

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Unit II Case Study

Instructions

Choose a publicly traded company that issues bonds. You can locate this information by reviewing your chosen company’s annual report online. A good place to start is the Annual Reports website. In your case study, discuss the following aspects of the company.

1. Provide a brief introduction of the company, including its name, headquarters, products/services offered, and approximate net worth.
2. What are the key features of one of the bonds issued by your chosen company? Discuss how the bond’s terms and collateral can affect the bond’s interest rate.
3. How would a potential investor determine the value and risk of the bond?
4. Explain the concept of the time value of money (TVM) as it applies to the company’s bond offerings.

Your case study should be at least two pages in length. Use APA Style to cite and reference all quoted and paraphrased material, including your textbook. Use a minimum of two sources, one of which may be the textbook. Include a title page, introduction, body, conclusion, and references page. An abstract is not required.

SOLUTION

Journal Entry:

Money has a time value because it can be invested to earn interest or returns over time. The value of money today is not the same as its value in the future. The purchasing power of money decreases over time due to inflation. For example, $100 today may not be able to buy the same amount of goods and services in ten years due to inflation.

The time value of money can impact my life now or in the future in many ways. For instance, when saving money for long-term goals, such as retirement, the earlier I start, the more time my money has to grow, earning returns and interest. The time value of money is also relevant when borrowing money, such as taking out a mortgage or student loans. Borrowing money requires paying interest, and the longer it takes to pay back the loan, the more interest will accrue, increasing the total amount to be paid back.

A personal example of the time value of money is when I decided to start saving for a down payment on a house. I set a goal to save $20,000 in five years. Instead of putting the money in a regular savings account, I chose to invest it in a low-risk portfolio. By the end of the five-year period, I had earned $3,000 in returns, increasing my total savings to $23,000. The time value of money allowed me to reach my goal faster and with more money than if I had simply saved it in a regular account.

In conclusion, the time value of money is a crucial concept in personal finance. Understanding how it works can help individuals make informed decisions about saving and inve