umuc finc330 week 2 discussion latest june 2016

| June 13, 2018

GRADED DISCUSSION WEEK 2

Time Value of Money Equations

The time value of money theory, a fundamental financial
concept, states that a dollar received today is worth more than a dollar
received tomorrow because today’s dollar
can be invested and earn a return.

After reviewing your study material on this concept provide
a short concise response to each of the following questions

Question 1 – Why is the time value of money concept so
important to the measurement of financial value? Specifically explain or illustrate how this
critical concept is used to aid in measuring financial value.

Question 2 – There is an inherent opportunity cost contained
in every time value of money calculation. What is this opportunity cost and
where is it represented in the Present Value equation? Provide a illustrated
example

Question 3 – In your own words describe the fundamental
relationship that exists between the Present Value Equation (PV) and The Future
Value Equation (FV) and then illustrate this relationship using the PV and FV
formula.

You are expected to make your own contribution in a main
topic as well as respond with value added comments to at least two of your
classmates as well as to your instructor.

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