Week 2 Discussion

Please respond to the following:

• Most of us intuitively understand that a dollar required today does not have the same value as a dollar needed (or utilized) in the future. This is due to several factors including interest rates, compounding factors, discounting factors and financial risk. Compare the total payback for a $100,000, 5%, 15 year mortgage and a $100,000, 5%, 30 year mortgage. Suggest a reason for the difference.
• Give an example of how your newly acquired knowledge of Time Value of Money (TVM) calculations could better prepare you for the next negotiation or big-ticket purchase in your life.