Part 1:
In any organization, there are stakeholders and management. The stakeholders are basically the financiers who commit their financial resources to the organization with the aim of getting returns for their investment. On the other hand, are managers contracted to oversee the wealth maximization for stakeholders and taking note of their interests? This is well known as the agency relationship.
In my professional experience, the management from one of my former organization where I worked decided to play tricks with stakeholders’ money. An opportunity had come along where an upcoming project in real estate sounded so viable to invest in. This involved buying some houses off the plan at a low price and then selling them at a profit. The managers decided to engage in the investment using the organization's money but without the consent of the stakeholders. This was a deliberate selfish project for personal gains which never sorted the interests of stakeholders, which lead to a lot of conflicts when stakeholders got to learn about it. The project suffered a blow when the returns expected were way less than expected; this put all the invested money at a high risk of getting lost (Ciepley, 2020).
There are different ways to mitigate these conflicts and align the relationship between stakeholders and management. Changing the remuneration mode into a performance-based pay, unlike the usual fixed salary method even when productivity is low. Another tool is to make managers part of the organization by inviting and offering shares and stock to them; this will make the management part of the organization.
The above tools will go a long way in resolving the conflict between stakeholders and management. Changing the remuneration terms to performance-based will make sure managers are on their toes working for the good of the organization. Managers will seek the best interests and avoid decisions that might jeopardize the earnings of the organization, leaving nothing to take home in the form of salary. No one would destroy something that promises their survival; it is for this same reason that managers should be made owners of the organization through owning shares. Any manager will work in the best way to see the organization prosper and at no time will they result in dubious activities that risk the organization's prosperity. A loss for the organization is an ultimate loss for managers (Soliman, 2018).
Part 2:
Time value of money is a key tool in evaluating different financial aspects to aid in better decision making. Money now is far way better than promised money tomorrow. Time value of money is applied in settling for a viable investment that promises the best returns based on the current value of money and the net investment return at a later date that compensates for all lost privileges. This is done through a clear calculation of all of the expected value to be gained at the end of the investment period taking into consideration currency depreciation, inflation, and lost privilege (opportunity cost) incurred from differed consumption. Time value of money aids the organization in making decisions concerning future projects that might foster growth and high profitability. Thus, the decision of whether to invest or not is well made (Baum, 2020).
References
Ciepley, D. (2020). The Anglo-American misconception of stockholders as ‘owners’ and ‘members’: its origins and consequences. Journal of Institutional Economics, 1-20.
Kahn, M. J., & Baum, N. (2020). Time Value of Money, or What Is the Real Financial Value of an Opportunity?. In The Business Basics of Building and Managing a Healthcare Practice (pp. 9-12). Springer, Cham.
Yasser, S., & Soliman, M. (2018). The effect of audit quality on earnings management in developing countries: The case of Egypt. International Research Journal of Applied Finance, 9(4), 216-231.