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Time Value of Money
An individual's best friend owes him $600 dollars, and asks if he can pay the individual back in six monthly installments of $100 dollars, is this a good way to be paid? This decision is a good example of the concept of the Time Value of Money or TVM. Time value of money is the concept that "a dollar that you have today is worth more than the promise or expectation that you will receive a dollar in the future" (Getobjects, 2002). Factors that might affect TVM like compound interest, present value, future value, opportunity costs, annuities, and the rule of 72 are important to understand when planning your financial future.
Interest can be defined as either a fee that is charged by a lender for borrowed money or as a return upon an investment (Investorwords, 2007). Compounded interest occurs when an investment returns interest upon the initial investment and the interest accrued every period since the initial investment was made (Econedlink, 2007). The initial......

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Approximate Word Count: 824
Approximate Pages: 4 (250 words per double-spaced page)

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