The time value of money is the foundation of for all of finance. Each transaction has a cost associated with it.

profiledonnor

 

   Take a look at today's interest rate at : http://www.treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TestView.aspx?data=yield.

 

   Choose an appeal company that is publically traded. Imagine the company is planning on building another facility to make garments. This company will need to spend at least $1,000,000.00 to build the plant. The company has decided to take a loan to pay for the plant. The company has the choice of starting construction today or in 6 months. Looking at today's interest rates, compare them to rates of 6 months ago. In your opinion should the company begin construction today or 6 months from now? Also, explain your answer to each of the following questions:

 

1. In your opinion do you believe that these rates will increase or decrease within the next 6 months?

 

2.Why is the time value of money important to the company?

 

3. If the company chooses to wait 6 months what does that say about the company's view on the time value of money?

 

4. What are the risks involved in waiting 6 months?

 

 

    500-700 words cites and references.

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