Overview
This week included a foundational concept in Finance: Time Value of Money (TVM). In order to understand and make sound investment decisions, a financial manager must be able to compare and contrast projects offering different cash flow streams. Applying the time value of money theory provides this standard.
For this discussion post, consider an example either personally or professionally in which you applied the Time Value of Money concept. Personally, this might include the purchase of an automobile or home. From a professional standpoint, this might be your company deciding on a vendor or a project to execute. In your post, please make sure to:
- Describe the financial decision and setting.
- For the example provided, include the values for variables PV, FV, CF (PMT), N, and I.
- What was the opportunity cost for you? Is this fixed or could it change over time?