# M2 (TW) RESPONSE

NEED RESPONSE – 2 PARAGRAPHS WITH 1 REFERENCE:

ORIGINAL POSTING:
Assignment 1: Discussion—Time Value of Money
Time value of money analysis has many applications—both personally and professionally. The calculations can be performed using Microsoft Excel, factor tables, or a financial calculator to help make informed decisions, such as planning for retirement, loan decisions, and capital projects.
The concept of time value of money helps managers value cash flows and assess risk within the organizations.
In this assignment, you will discuss specific situations where the time value of money is applied in personal and professional situations.

Share any professional and personal decisions you made in which the concept of time value of money was utilized and include the following:

The specific decision for which you used time value of money.
The manner in which you applied the concept.
The tools you used to complete the analysis, including the timeline.
An explanation of how using the concept helped you reach a more accurate decision than if time value of money had not been utilized.
Your response should consist of a minimum of 300 words and demonstrate critical thinking and analysis.

Download the MS6014_M2A1_workbook.xlsx template, and using the appropriate Excel financial functions, do the following:

Determine the present value of \$75,000 discounted at 6% over 6 years.
Determine the future value of \$100,000 invested today at 4% for 5 years.
Determine what annual payment will need to be invested if you have \$10,000 today and want it to grow to \$100,000 over 20 years at 4.5%.

STUDENT POSTING:

According to Investopedia.com, The time value of money (TVM) is the idea that money available at the present time is worth more than the same amount in the future due to its potential earning capacity. This core principle of finance holds that, provided money can earn interest, any amount of money is worth more the sooner it is received.

This week my cousin sent me a text asking about her 401k and if she should take out a loan to help her out of a financial bind. I advised that she needed to check what the penalties are if they had any since she is 31 years old. She said that she would look into it but she was willing to pay the penalty. I advised that depending on how steep the penalty would be since if she takes out \$3000 and the penalty is \$1000, then she’s paying back \$4000 on something that she borrowed \$3000 for. Not to mention that 401k are no longer as safe as they used to be, she could borrow \$3000, and lose \$6000 based on her 401k.  I told her to explore all her options before settling on this option.
The tools that she can use to decide which decision is better for her are:

Her HR department
Articles on the subject. I found this article and sent it to her.

https://aaacreditguide.com/401k-loan/

Contact her financial planning company directly.

The goal is for my cousin to make an informed decision, the only way she can do this is to be educated about her options. I am hoping that providing this information to my cousin she feels better prepared and makes the best decision for her and her family. I believe we trust people too many times with our important decisions instead of looking for the answer ourselves we listen to what are friends or family think. The answer could have changed since the person you asked went through the process. Trust yourself and look for the answers for yourself.
Part 2

Determine the present value of \$75,000 discounted at 6% over 6 years.

Future Value = \$75,000
Present Value = \$52,872.04

Determine the future value of \$100,000 invested today at 4% for 5 years.

Future Value= \$121,665.29
Present Value=\$100,000

Determine what annual payment will need to be invested if you have \$10,000 today and want it to grow to \$100,000 over 20 years at 4.5%.

Monthly Payment= \$193.66
Present Value= \$10,000
Future Value = \$100,000
References
Investopedia. (2018, March 6). Time Value of Money – TVM. Retrieved fromhttps://www.investopedia.com/terms/t/timevalueofmoney.asp

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