Question 1: What is time value of money? How is it important?
Question 2: Motivation and formula of calculation of future values and present values of a simple (single) cash flow, an annuity, and a perpetuity?
Question 3: Implications in financing and investment?
Alternating theories is illustrations and examples that allow people to image them in practice.
CONTENT
QUESTION 1: WHAT IS TIME VALUE OF MONEY? HOW IS IT IMPORTANT? Any rational person would like defer payment into the future if he/ she have to pay and take the money in the present if he/ she are to receive. We can see that there are three elements here, i.e. present, future and money. Or we can say that the theory lying behind such behavior of paying and receiving money is something relating to TIME. And that theory is called TIME VALUE OF MONEY. As said above, people always want to get money as soon as possible and