The time value of money is an important topic in finance. It essentially postulates that $1 today is worth more than $1 received tomorrow. Since we have completed a few problems dealing with this topic last week and since we argued that TVM is fundamental to your business studies, then let us discuss further
1. How do you think today’s low interest rate environment is impacting the time value of money and how might this change the value of an asset or a liability?
2. Explain the relationships between net present value and shareholder wealth maximization in the context of the future and present value of a regular pattern of inflows and outflows of cash (think about situations involving the PV & FV of annuities in the e-text).