Time value of money application

An important impression in finance is cartridge clip eon apprize of currency which means that exchange received at opposite times has polar values. A dollar nowadays is price more than the same dollar tomorrow. Time value of property concepts helps a manager or investor understand the benefits and the afterlife cash flow to help the manager or investor if the futurity benefits provide justify the initial cost of the project or investment. In this paper we will identify and discuss how different note use this concept for the betterment of their condescension. currencymaking(prenominal) banks:Commercial banks uses this concept of time value of money for the betterment of their calling. unrivalled whitethorn wonder, ? how does this process work?? commercial-grade banks take deposits from individual and institutional customers, which they then use to extend credit to other customers. They shit money by earning more in wager from borrowers of business loans, mortg ages, auto loans, and home repair loans; than they pay in rice beer to those whose deposits they accept. (wet feet.com, internet) Banks also provide loans in the form of credit prognosticate card charges, and render local services including safe deposit, notary, and merchandiser banking. finished this process Commercial banks in the U.S. earn 5 to 14 portion interest on most of their loans.

As commercial banks typically only pay depositors 1 share - if anything - on checking accounts and 2 to 3 percent on savings accounts, they draw off a tremendous amount of money in the engagement between the cost of their funds (1 percent for checking account depos! its) and the provide on the funds they loan (5 to 14 percent). (college journal.com, internet)Credit card fiscal service companies:These companies uses the similar concept of time value of money to make money for themselves. Credit card uses a simpleton terminology they provide convenience and... If you take to get a full essay, order it on our website: OrderCustomPaper.com

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