What decisions do you make that involve time value of money calculations? Use examples and explain your answers.

Talk about the time value of money

The time value calculation is a key decision that affects investing. Understanding how an investment’s lifetime will change over time is essential in order to make informed decisions about the financial worthiness of your investment. An example: If an investment earns 7% per year and the initial cost is $100, using time value calculation I can estimate how much that investment will be worth in 10 years ($196.72). This allows me compare investment options and to make informed decisions about which one offers the greatest return.

Time value calculations also need to be considered when you take out loans like mortgages and car loans. These loans often have interest payments that are spread over time. By understanding how the interest rate & loan duration affect the amount due upon repayment (i.e., total payment amount & monthly instalments) consumers have better control over their finances & know exactly what they’re getting into before committing themselves.

In conclusion, understanding the fundamentals behind time value of money calculations can help provide greater insight into various financial decisions – allowing individuals/businesses to make more informed choices when it comes to investments, loans etc.

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