Question

In: Accounting

What is time value of money and also describe the meaning of annnuity

What is time value of money and also describe the meaning of annnuity

Solutions

Expert Solution

Step-by-Step Solution

Step 1: Definition of the time value of money

The invested cash that earns interest over time is called the time value of money.

 

Step 2: Annuity

The annuity is a series of equal cash payments in a similar period. In the annuity, the investor makes an equal cash payment in a similar period


The rate of return means the percentage of the amount received from the investment.

Related Solutions

what the meaning of "time value of money". Why it is important financial concept? How to...
what the meaning of "time value of money". Why it is important financial concept? How to apply it to a financial decision. Tell some pros and cons of payback analysis(break even point) ROI, and net value (NPV) and give an example how these might be used to evaluate competing business project proposals?
What is the time value of money and why is it important? Describe the net present...
What is the time value of money and why is it important? Describe the net present value (NPV) and internal rate of return (IRR) methodologies and their use in capital budgeting decisions. What is NPV when the discount rate (hurdle rate) equals IRR? project management
What is time value of money? Whu problems may arise if time value of money is...
What is time value of money? Whu problems may arise if time value of money is not taken into consideration while making transactions? Explain theoretically how can these problems be dealt with?
"Time Value of Money " The time value of money is a critical concept to understand...
"Time Value of Money " The time value of money is a critical concept to understand in accounting, especially when dealing with loans, investment analysis, and capital budgeting decisions. The time value of money concept can be used to decide which projects to start and what investments to make. You can also utilize the time value of money concept in your personal life. Provide two (2) decisions you may need to make that could involve the time value of money....
"Time Value of Money " The time value of money is a critical concept to understand...
"Time Value of Money " The time value of money is a critical concept to understand in accounting, especially when dealing with loans, investment analysis, and capital budgeting decisions. The time value of money concept can be used to decide which projects to start and what investments to make. You can also utilize the time value of money concept in your personal life. Provide two (2) decisions you may need to make that could involve the time value of money....
1. What is the TERM Used to Describe the "Time Value of Money" 2. Which One...
1. What is the TERM Used to Describe the "Time Value of Money" 2. Which One is the most Valuable Investment option? Assume Annual Compounding at an interest rate of 6%? a. They are All the Same b. $20,000 in 9 years c. $10,000 Today d. $40,000 in 18 years 3. What is the Term used for a Stream of Equal Periodic Cash Flows. 4. Which One is False? a. Most Capital Projects have little Risk to an Organization b....
What is "Time Value of Money" relating to economics?
What is "Time Value of Money" relating to economics?
Describe how the concept of the time value of money is incorporated into the valuation of...
Describe how the concept of the time value of money is incorporated into the valuation of bonds, long-term leases, and pension obligations.
Time value of money
How many years will it take for $136,000 to grow to be $468,000 if it is invested in an account with an annual interest rate of 8%?
What factors affect the magnitude of the time value of money?
What factors affect the magnitude of the time value of money?
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT