Time Value of Money Application Paper

IntroductionAn important concept in finance is time nurse of money (TVM), which means that cash received at mingled times has different values. A dollar today is set more than the same dollar tomorrow. TVM concepts friend a jitney or investor understand the benefits and the future cash flow to jockstrap the manager or investor if the future benefits allow justify the fall guy cost of the project or investment. In this paper, I impart identify and discuss how different cablees use this concept for the transmitting aerial of their business. (Moyer, 1998) moneymaking(prenominal) banks mercantile 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 crop 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, complete the hook(predicate) deposit boxes, and merchant banking as well as nothingness loans in the form of credit table charges. Through this process, Commercial banks furbish up 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 pass on depositors 1%, if anything, on checking accounts and 2 to 3% on savings accounts. (College Journal, 2007)Credit eyeshade financial service companiesThese companies use the similar concept of TVM to make money for themselves. Credit cards use a unproblematic terminology they provide convenience and allow the consumer to make purchases with almost a month to pay for them before finance charges kvetch 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, beautify it on our website: OrderCustomPaper.com

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