Time Value of Money - Essay Example

Summary

In the essay “Time Value of Money,” the author examines the consideration of the change in the value of a given amount of money over a given period of time. This is because there are certain factors within the economy that create a state where a given sum of money cannot purchase the same amount of items…

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Subject: Sociology
Type: Essay
Level: Undergraduate
Pages: 3 (750 words)
Downloads: 2

Extract of sample "Time Value of Money"

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These payments are predominantly made on an annual, semi-annual, quarterly or monthly basis, at the end of the given period. Ordinary annuities have numerous benefits and some disadvantages. 2. Surrender Penalty: there is normally a fine levied on the investor in the case where they decide to surrender the given contract (annuity) within the first 5 to 10 years, depending on the duration of the given annuity. Given t analysis provided above, it is clear that it is possible for the company to double their investment given a discounting rate of 6% with annual cash flows of $10,000 in 12 years.

With a present value of $83,838.44 and a future value of $168,699.41, the company can clearly double.

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