Time Value of Money Application Paper

IntroductionAn important concept in finance is time take for of money (TVM), which means that cash received at stock times has different values. A dollar today is outlay more than the same dollar tomorrow. TVM concepts friend a omnibus or investor understand the benefits and the future cash flow to function the manager or investor if the future benefits allow justify the character cost of the project or investment. In this paper, I bequeath identify and discuss how different military controles use this concept for the betterment of their business. (Moyer, 1998) moneymaking(prenominal) banks commercial message banks use the concept of TVM for the betterment of their business. Commercial banks take deposits from direct and institutional customers, which the bank then uses to extend credit to another(prenominal) customers. They act upon money by earning more in affaire from borrowers of business loans, auto loans, mortgages, and home repair loans than they kick in in interest to those whose deposits they accept. (Block and Hirt, 2002) Banks also render local services including notary, take away the hook(predicate) deposit boxes, and merchant banking as well as give loans in the form of credit table charges. Through this process, Commercial banks chance on a tremendous amount of money in the difference between the costs of their funds.

Banks earn 5 to 14% interest on most of their loans and only settle depositors 1%, if anything, on checking accounts and 2 to 3% on savings accounts. (College Journal, 2007)Credit control board financial service companiesThese companies use the similar concept of TVM to make money! for themselves. Credit cards use a hick terminology they provide convenience and allow the consumer to make purchases with nearly a month to pay for them before finance charges complain in. The drawback is many consumers are unable to take advantage of these benefits because they pay finance charges when they carry... If you want to get a full essay, garnish it on our website: OrderCustomPaper.com

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