Carlos Albizu University Time Value of Money Discussion Reply Principles of Finance Value of Money Prompt Reply to each Peer about their post. Value of

Carlos Albizu University Time Value of Money Discussion Reply

Principles of Finance

Value of Money Prompt Reply to each Peer about their post.

Value of Money Discussion Reply 1 Joanita:

Hello, Classmates and Professor Armas,

For this week’s discussion is about Time Value of Money.

In the scenario provided, if I was offered $900 now or $1000 one year from now and I had to choose one, I must think about this one. According to Melicher and Norton (2017), Time value of money is “math of the finance whereby a financial hereby a financial return (e.g., interest) is earned over time by saving or investing money. For this week’s discussion is about either choosing the present value being able to save or invest in the amount or value today or the future value “savings amount or investment is its value at a specific time or date in the in the future”, (Melicher & Norton, 2017).

When we use the present value, we can compare the prices at a different point in our life. Even though I want to pick the $1000 one year from now because it will give me 11% in interest, would rather pick $900 now and risk that 11% interest I can gain in a year. For this discussion, I will say I am torn between the two offers. Taking the $900 now, I can invest it and make more money later even though it means me losing the $900 and gain less. I feel like the value of money will decrease in the future after taxes. The $900 will be invested into making the value more by being invested. In conclusions, to be honest I will say, even though even getting that instant cash now sounds really good, I feel like getting $1000 later on because it will give me a profitable interest of 11% which is hard to get in a year if I take on $900 now, I will take the $1000 because of the 11% interest. I feel like by the time I wait to get $1000, I will be focusing on investing in other businesses and by the time I get that $1000, I will be adding it to my invested assets and it can take care of any additional charges that I owe from my previous investments. That is just my opinion.

Reference

Melicher, R., & Norton, A. (2017). Introduction to finance: Markets, investments, and financial management (16th ed.). John Wiley & Sons, Inc. retrieved from

https://online.vitalsource.com/#/books/9781119321118/cfi/6/38!/4/2/8/2/4/4/8/8/2@0:0

Value of Money Discussion Reply to Teacher:

In Chapter 9, your textbook discusses the Rule of 72. The Rule of 72 is a shortcut method to determine how long it will take for your investment to double, using compounding interest.

In the CNBC article, Kathleen Elkins highlights the following “Think about your savings for the future,” Tom Mathews and Steve Siebold write in their book “How Money Works,” which highlights the “Rule of 72” as of one of three essential personal finance topics to understand (the other two being compound interest and the time value of money). (Elkins, 2020)

Can anyone talk more about the Rule of 72?

Here are two good resources:

https://www.investopedia.com/terms/r/ruleof72.asp

https://www.cnbc.com/2020/01/28/what-the-rule-of-72-is-and-how-it-works.html

Reference:

Elkins, Kathleen. (2020, January 29). This simple formula tells you how long it will take for your money to double—while you sit back and relax. CNBC. https://www.cnbc.com/2020/01/28/what-the-rule-of-72-is-and-how-it-works.html