Explain to a friend or relative how you would use the TVM concept to achieve their...

Explain to a friend or relative how you would use the TVM concept to achieve their desired retirement amount. How much would they need to retire? How would you develop a savings plan using that number? Use Excel to calculate and explain the numbers when posting to the forum. Include the interest rate and investment.

Expert Solution

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Explanation:

Time value of money means that the identical sum of money Available today(present point of time) is worth more than the identical sum of money Available tomorrow (Future point of time).

And an identical sum of money grows with time.

The factors taken into consideration by the time value of money are
1. The opportunity cost.
The sacrifice Of current consumption.
2. The Inflation premium.
The general rise in prices, loss of purchasing power.
3. Risk Premium:
Extra return or compensation required for bearing risk.

Even if we disregard the risk. They are the other two factors which will be taken into consideration.

The is a rate determined for discounting, using these factors.

jeff jeffy answered 2 years ago

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