We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Nobody downloaded yet

Time Value of a Dollar - Essay Example

Comments (0)
Summary
Name Instructor Task Date Time Value of a Dollar Time value of money is a theory that suggests that a dollar is worth more now than at a future date. That is, a dollar at hand is worth more than a reliable promise to receive another in the future. This concept is widely used to calculate the value of payments anticipated in future, for example, retirement savings, college funds, mortgages, loans…
Download full paper
GRAB THE BEST PAPER
Time Value of a Dollar
Read TextPreview

Extract of sample
Time Value of a Dollar

Download file to see previous pages... Critics are already arguing that the dollar can no longer be the reserve currency especially after the collapse of the U.S mortgage market, which set off the most awful global recession recently. There are a couple of reasons people prefer the present value of a dollar. If they can invest the money to earn interest over a period of time that is greater than a future payment, they will invest it in the present. Inflation is also a key factor in time value evaluations since it reduces the spending power of a dollar. Inflation is the persistent increase of prices and a dollar today may buy less quantities of a similar commodity in the future. Taking this into consideration one would rather invest now in a project that would earn them continuous cash flows rather than save that money to use it at a future date. Another reason is the default risk, which is the threat of not receiving the promised dollar in future. To understand time value of money we define the terms Net Present value, Future present value and present value. The net present value is the value of future streams of cash flows into the cash at hand in the present date. The future value is the value of the money an individual has now at a later day. ...
Different scholars explain that there is need to create strong fundamentals of the U.S economy, build investor confidence and diversify out of the dollar in order to protect it from depreciating with time. The U.S economy has weak fundamentals such as huge national debt, high unemployment rates, and international military operations. In a highly publicized vote the senate recently raised the debt ceiling to $14.3 trillion to avoid defaulting debt obligations which would be a catastrophe by itself. This could create a debt driven crisis that could strain standards of living by being detrimental to economic growth, dampen wages and restrict the government from investing or providing a safety net. It is necessary that the debt ceiling is not exceeded so as to prevent this debt driven crisis as it would accelerate the depreciation of the dollar. Military expenses are not productive and are a nonmonetary reason for inflation, an opinion that most economists share. There is the need to show creditors that the government is serious about stabilizing federal debt. Spending cuts are necessary to protect against the decreased value of money in future. Building investor confidence is a key to protecting the future value of money, and the government must ensure that it restores investor confidence for most believe that printing excess money for bailouts and stimuli will eventually weaken the dollar (Steverman). Asset prices should be watched carefully so that they remain in line with their underlying values and also do all it can to ensure economic growth. So far, the low dollar policy has helped as it has ensured that exports remain higher than imports. And if this keeps up there is hope that in the future the value of the dollar will be ...Download file to see next pagesRead More
Comments (0)
Click to create a comment or rate a document
CHECK THESE SAMPLES - THEY ALSO FIT YOUR TOPIC
Hedging against a Weak Dollar
The paper tells that in globalized marketplaces, the necessity to deal in foreign currency is inescapable. The process of acquiring a foreign currency for foreign business activities can be daunting, requiring business forethought and prior contractual arrangements. Currencies change in value all the time, and the process of exchanging a currency for another can be a risky and dangerous process that can cause numerous losses.
8 Pages(2000 words)Essay
Correlations in Gold, Oil and Dollar Value index
The major turn around in the value of oil was seen after the 1973 oil embargo of the oil producing countries from around the world, which shook the entire base of world economics. It was after this the major players in the world economics understood that oil it just not just a black liquid it is the black gold and the need for the survival of every country in the world.
5 Pages(1250 words)Essay
Factors Influencing Exchange Rate Between the US Dollar and Euro
As Rahn (2003) points out, in the place of the 80 cents one had to pay for each euro in 2009, presently, one has to pay 1.24 dollars per euro. While some scholars argue that a further fall is in the pipeline, a rational assumption is that as dollar already reached its minimum, its value is likely to improve in the coming years.
3 Pages(750 words)Essay
Comparative Study of US Dollar and Euro
Introduction The development of economies of countries worldwide is primarily depended on their potentials to promote their currency in regard to global trade transactions. US Dollar is used for measuring the value of petroleum and gold, goods that are of primarily importance for global economy.
8 Pages(2000 words)Essay
The Time Value of Money
Although, our decision is correct in financial terms, what we fail to understand is that the $ 10000 received today will not be equal to $ 10000 received five years from now because the $ 10000 today can be invested, providing us with interest and making the value of this $10000 higher ($10000 + interest).
4 Pages(1000 words)Essay
Time Value of Money
Time value of money concept forms the basis of this annuity concept (Gordon, 1999). To understand the concept better, one must understand the concept of opportunity costs. Opportunity costs are the benefit that a person sacrifices by using money in a particular way.
3 Pages(750 words)Essay
Utilizing the Time Value of Money
Companies or investors try to find out the riskiness and the profitability of an investment before hand so that they can optimize their investment. Tools such as net present value and internal rate of return are commonly used to find the profitability of an investment.
2 Pages(500 words)Essay
Time Value of Money Application Paper
More so, time value of money states that money received today by a business man is worth more than that same amount of money in future (tomorrow). That is why if the money is invested today say in stock market, the dividend the money will earn tomorrow
3 Pages(750 words)Essay
Time Value of Money _
The article discusses the criteria, legal factors and issues an attorney has to consider as a trust fiduciary on annuity investments in the US. Various federal and state rules have been trying to narrow down the sale of equity indexed annuities to
3 Pages(750 words)Essay
The High Australian dollar
The essay found that, the increase in the value of Australian dollar has both short term and long term impacts on various sectors, for instance, unemployment rate, economic
7 Pages(1750 words)Essay
Let us find you another Essay on topic Time Value of a Dollar for FREE!
Contact us:
+16312120006
Contact Us Now
FREE Mobile Apps:
  • About StudentShare
  • Testimonials
  • FAQ
  • Blog
  • Free Essays
  • New Essays
  • Essays
  • The Newest Essay Topics
  • Index samples by all dates
Join us:
Contact Us