--%>

Why does money contain time value

Why does money contain time value?

Positive interest rates denote that money has time value. While one person lets another borrow money, the first person needs compensation in exchange for decreasing current consumption. The person who borrows the money is eager to pay to increase current consumption. The required rate of return on investment reflects the pure time value of money, adjustment for expected inflation, and any risk premiums present.

   Related Questions in Finance Basics

  • Q : Determine per unit cost of production

    Normal 0 false false

  • Q : Supply of automobile tires Normal 0

    Normal 0 false false

  • Q : Define the term Baseline Adjustment or

    Define the term Baseline Adjustment or  Baseline Budget: Baseline Adjustment: Also termed to as Workload Budget Adjustment.

    Q : Explain primary assumption behind

    Explain primary assumption behind the experience approach to forecasting?The experience approach to forecasting is depending on the supposition that things will happen a certain way in the future since they happened that way in the past. For exa

  • Q : Impotence of distinction Normal 0 false

    Normal 0 false false

  • Q : Define One-Time Cost One-Time Cost : A

    One-Time Cost: A proposed or real expenditure that is non-recurring (generally only in one annual budget) and not permanently comprised in baseline expenditures. The departments make baseline adjustments to eradicate prior year one-time costs and suit

  • Q : Describe the primary variables in EOQ

    Describe the primary variables being balanced in the EOQ inventory model? Clarify In the EOQ model the primary variables being balanced are carrying costs and ordering costs. The more frequent orders are placed the lower the firm's carrying co

  • Q : Explain the investment opportunity

    Explain the investment opportunity schedule (IOS)? How does it help financial managers take business decisions? The investment opportunity schedule illustrates graphically proposed capital budgeting projects depicting the IRR and dollar amount

  • Q : State Section 31.00 Section 31.00 : It

    Section 31.00: It is a Control Section of Budget Act which specifies some administrative procedures. For illustration, the section subjects to the Budget Act appropriations to different sections of the Government Code, restricts the new positions a de

  • Q : How is finance associated to accounting

    How is finance associated to the disciplines of accounting and economics? Financial management is basically a combination of accounting and economics. Firstly, financial managers employ accounting information such