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Suppose That You Just Attended a Lecture on Time Value

question 28

Essay

Suppose that you just attended a lecture on Time Value of Money. On your way home, you stopped in to get a cup of coffee. One of your classmates, who missed the lecture, joined you for coffee and asked you to explain to her the key concepts of time value of money and how you could use it to solve some of practical financial problems. What would you tell her?


Definitions:

Market Value

The cost for buying or selling assets or services in the marketplace at this time.

Constant Rate

A fixed percentage rate applied over a certain period which does not change.

Dividend Per Share

The amount of dividends paid to shareholders per share, indicating the distribution of company profits to shareholders.

Annual Dividend

The sum of all dividends a shareholder gets from a company over the course of a year.

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