"Time Value of Money and Annuity" Please respond to the following:
• From the e-Activity, create a personal scenario that exemplifies the time value of money that includes the opportunity cost involved.
- Describe one (1) real-life example that shows the manner in which a person can use an annuity for retirement planning.
Week 5 eActivity
Watch the video titled "The Time Value of Money" (3 min 0 s) from the Teach Me Finance Website, located at https://teachmefinance.com/timevalueofmoney.html, to learn how to calculate the present and future value of money. Be prepared to discuss.
The concept of time value of money.
Compounding and discounting are often referred to as the mathematics of finance. Compounding is the process whereby interest is earned each period on the principal amount plus the interest previously earned. Compounding is, thus, related to the accumulation of future values.
The calculation procedures are there to enhance understanding of the logic involved in the time value of money concepts. This is the process of working the problems the "long way." Financial calculators or computer software programs can also be used. The student can make use of all three computational approaches.
The websites below can help explain the time value of money. (Please type the websites below directly into the web address bar)
https://www.studyfinance.com/lessons/timevalue
https://teachmefinance.com/timevalueofmoney.html
https://www.zenwealth.com/BusinessFinanceOnline/TVM/TimeValueOfMoney.html