An advertised monthly lending rate of 9% is about 11% per year. This difference between an advertised rate and the annualized rate is based on finer TVM details that may be overlooked by borrowers. Discuss how you may have used TVM in a recent investment or loan decision and explain the TVM involved in your transaction. If you have not used TVM in the past financial transactions what practical TVM application would you expect to encounter in your future.
Introduction:
The term time value of money is a financial concept which means that the value of money at present would be more than its sum in the future because of its earning capacity. The given money would earn interest & hence more early the money received more would be its value.
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