BUSINESS ADMINISTRATION
FINANCIAL MANAGEMENT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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preparation of loan repayment schedule
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sinking fund creation
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valuation problems
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all the above
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Detailed explanation-1: -TVM can be used to identify the future amount or to identify the present value of the future amount. Therefore, TVM plays a crucial role in not just investment decisions but also financial decisions. For example, assume that an individual has the opportunity to receive $1, 000 today or a year later.
Detailed explanation-2: -The applications of the time value of money may involve loan valuation, bonds valuation, capital budgeting decisions, investment analysis, and personal finance analysis.
Detailed explanation-3: -Time value of money real life example, if you put $100 in a bank, you may be willing to accept a $5 return on an investment after a year. This is because the risk that the bank will not repay you is low. If you lend the same $100 to a stranger, you may require a $20 return on investment instead.