Often it is found that the student face problem while completing the present value homework answers. This is an educational blog which is solely dedicated to help out the students to solve out the present value homework answers.
Through this blog, we have tried to define all the terms that are related to the calculation of the present value. Obviously, knowing only the basic terms would not help you to solve the problems. That is why our recommendation to all the students would be taking help of the professionals. One of the best professional help that you can obtain is the homework help services that are available online. So read till the end to know more about these homework help services.
What is present value?
The present value is the value of the current currency in the future. The future value of money is discounted at a discounting rate. The higher is the discounting rate the lower would be the present value of the money. The present value of money is always less than or equal to that of the future amount.
The present and future valuation of money are done to evaluate the loans, annuity, bonds, mortgage, sinking funds and many more. The present value homework answers would help you to make comparison between the cash flows that have occurred in two time period.
What are the uses of Present valuation?
It is important to know the importance of valuation of the money at present. The present value of money would help in evaluating the future value. It would help to fix an interest rate. It would help the business firms to make a comparison between the cash flow statement in current and past. It also helps the business firms to take crucial decision while investing in different projects. The main aim of any business firm is to earn profit.
So before making any investment, the business firms should calculate the present and future value of money. Comparisons are made between projects and the project with the highest present value should be chosen.
What is future value of?
The study of present value is insignificant without the understanding of the future value. To understand better the present value homework answers, it is important to know what is meant by the future value. It is nothing but a comparison of the present value with the future after putting the rate of interest. It is used for future investment and future cash flow statement comparison.
To calculate the future value of money, it is important to ascertain how the value of money is fluctuating over time. It depends on several factors like inflation, output, etc. The next and one of the most important things is the calculation of the interest rate. The next part of the blog highlights more about the interest rate. The next step would be an evaluation of the worth of money given today with the future.
All the evaluation is done so that it gives a return to the firm. Therefore find how much of the return would you get back after a period of time and whether that would actually benefit you or not.
Interest rate and present value
There is a close relation between the present value and the interest rate. Interest rate is nothing but the excess amount that is earned at the end of the period. While taking or giving loans, the interest rate is charged on the present value, and the future value of the investment is calculated. If the interest rate id high then sometimes people don’t take a loan.
On the other hand, the lender would be eager to give out loans to the people. Interest rate can be calculated by compound interest, simple interest, effective interest, real interest rate, nominal annual interest rate, etc.
The formula to calculate the time value of money follows as:
PV= C/ (1+i) ^t
Where “PV†is the present value of money, “C†is the future amount, “i†is the rate of interest, and “t†is the time period for which it is calculated. One amends the equation to get the desired value.
Homework help and more
Finally, we are here to help you out so that you can do better with your present value homework answers. As stated earlier, knowing only the basic terms would not help you do the homework properly. That is why we recommend you to use that services that are provided by the homework help service providers. These services are really very helpful for the following reasons:
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Apart from these, we will also recommend you to opt for online tuitions. Going through each and every reference is very important. One should go through the references before starting with their present value homework answers. These are certain tips from our side. I hope these would help you to complete your homework more efficiently and in lesser time.
In case you have further doubts, it is best that you consult professionals from these sites for free, before you go in for final choosing of their services. Happy studying!