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    helpme 83's Avatar
    helpme 83 Posts: 2, Reputation: 1
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    #1

    Feb 28, 2007, 10:26 AM
    Two finance questions
    1. Does Inflation have anything to do with making a dollar today worth more than a dollar tomorrow?




    2. List five different financial applications of the time value of money.

    This is what I have so far not sure if they are right- Present Value (PV) Future Value (FV) Present Value of an Annuity (PVA) Future value of an Annuity (FVA) and ? Not sure of the fifth one.
    CaptainForest's Avatar
    CaptainForest Posts: 3,645, Reputation: 393
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    #2

    Feb 28, 2007, 09:00 PM
    Quote Originally Posted by helpme 83
    1. Does Inflation have anything to do with making a dollar today worth more than a dollar tomorrow?
    Yes.

    Today, 2007, you can buy a loaf of bread for $3. In 2017, a loaf of break will cost you $3.50.

    Therefore, $3 today, in 2007, will buy you MORE today than it will in 10 years.


    Quote Originally Posted by helpme 83
    2. List five different financial applications of the time value of money.

    This is what I have so far not sure if they are right- Present Value (PV) Future Value (FV) Present Value of an Annuity (PVA) Future value of an Annuity (FVA) and ? not sure of the fifth one.
    Add Perpetuity to your list.
    Rupert Gregory's Avatar
    Rupert Gregory Posts: 1, Reputation: 1
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    #3

    Mar 4, 2007, 11:03 PM
    Quote Originally Posted by helpme 83
    1. Does Inflation have anything to do with making a dollar today worth more than a dollar tomorrow?




    2. List five different financial applications of the time value of money.

    This is what I have so far not sure if they are right- Present Value (PV) Future Value (FV) Present Value of an Annuity (PVA) Future value of an Annuity (FVA) and ? not sure of the fifth one.
    No, inflation doesn't mean much, what you need to worry about is the maturity risk on most investments due o the overimpending rate of interest fluctuation
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