week 4 discusion 1

WEEK 4: TIME VALUE OF MONEY

1) We all know that a dollar today is worth more than a dollar tomorrow. This is because in a situation of rising prices the purchasing power of a dollar goes on decreasing as the time passes by. We therefore need to know how much a dollar that we are going to receive in future is actually worth today. This is known as present value of money. Let's start our discussion with the difference between present value and future value of money. Explain compounding and discounting of interest with suitable examples.

2) Cash and receivables form a very important part of the current assets of any company. Based on your study of Chapter 7 and your research on the Internet, define cash and cash equivalent and restricted cash. What are receivables? How do accounts receivable and notes receivable differ?