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what are the reason that the value of a dollar tomorrow is not the same as the value of a dollar today?
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- Why does money have a time value? Does inflation have anything to do with making a ringgit today worth more than a ringgit tomorrow?APPENDIX C, TIME VALUE OF MONEY (“TVM") (end of text, pages C-1 to C-13) "A dollar today is worth more than a dollar in the future." Assumptions: 1. The dollar is invested today 2. The dollar is earning a positive return » 41+ interest FV $1 Simple interest: P x R x T Compound interest -Compounding (Future Value “FV") -Discounting (Present Value "PV"). In Accounting we record long term assets and long-term liabilities at their present value (cash equivalent amount); therefore, we mostly use PRESENT VALUE concepts. Two types of CASH FLOWS ANNUITY–very specific–it is the same dollar amount that occurs the same time each period. SINGLE SUM– A single sum can occur at any time at any amount. It is possible to have multiple single sum cash flows in an investment; an amount that does not occur at the same time each period. A cash flow is either an annuity OR a single sum, it cannot be both. Ordinary Annuity (Payment = $50) $50 $50 $50 $50 $50 $50 $50 $50 $50 $50 1 2 3 4 5 6 7 8 9 10 Single…How does a high rate of inflation affect money in all its different roles?
- According to the time value of money concept, also referred to as the present discounted value, is based on the principle that a sum of money in the present has lesser value than the same sum to be paid in the future. Select one: i. True ii. FalseCan the actual real rate of interest be negative? When ? Can the expected real rate be negative?When does the present economy studies do or use? a. When interest rate is not given b. When time is not given c. When time is not given but interest rate is given d. When time is given but interest rate is not given
