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REQUIREMENTS: (As close to 400 words if possible.) Why is time value of money important to investors? There are 5 components of All Time Value

REQUIREMENTS:

(As close to 400 words if possible.)

Why is time value of money important to investors?

There are 5 components of All Time Value of money problems. The first one is number of compounding periods, what are the other 4 components?

You have decided to buy a car, the price of the car is $18,000. The car dealer present you with two choices:

(A) Purchase the car for cash and receive $2000 instant cash rebate - your out of pocket expense is $16,000 today

(B) Purchase the car for $18,000 with zero percent interest 36-month loan with monthly payments.

Market interest rate is 4%. Which option above is cheaper? How much do you save?

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