Question
Time time value of money is the concept that a sum of money is worth more now than the same sum will be at a
Time time value of money is the concept that a sum of money is worth more now than the same sum will be at a future date due to its earning potential in the interem. The time value of money is a core principle of finance. A sum of money in the hand has grater value than the same sum to be paid in the future
Required:
a) You are considering depositing $300 in an account for 8 yrs with an interest rate of 10% What isthe present value?
b) What is the value of $300 in 8 yrs if it earns 10% compounded annually?
c) Your borrow $2000 from a loan shark for 6 yrs at an interest rate of 75% per year with annual compounding. What is the future value of the loan after six years?
d) suppose you convince the shark to charge simple interest instead of compound interest. What will be the future value of the loan?
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