Time value of money analysis has many applications—both personally and professionally. The calculations can be performed using Microsoft Excel, factor tables, or a financial calculator to help make informed decisions, such as planning for retirement, loan decisions, and capital projects.
The concept of time value of money helps managers value cash flows and assess risk within the organizations.
In this assignment, you will discuss specific situations where the time value of money is applied in personal and professional situations.
Tasks:
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- Share any professional and personal decisions you made in which the concept of time value of money was utilized and include the following:
- The specific decision for which you used time value of money.
- The manner in which you applied the concept.
- The tools you used to complete the analysis, including the timeline.
- An explanation of how using the concept helped you reach a more accurate decision than if time value of money had not been utilized.
- Your response should consist of a minimum of 300 words and demonstrate critical thinking and analysis.
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- Download the MS6014_M2A1_workbook.xlsx template, and using the appropriate Excel financial functions, do the following:
- Determine the present value of $75,000 discounted at 6% over 6 years.
- Determine the future value of $100,000 invested today at 4% for 5 years.
- Determine what annual payment will need to be invested if you have $10,000 today and want it to grow to $100,000 over 20 years at 4.5%.
