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Mya mosta recenta usea ofa TVMa calculationsa wasa duringa thea pasta year'sa Closurea proposala anda
negotiations.a Ina ordera toa determinea thea costsa associateda witha futurea salaries,a material,a anda
subcontractors,a wea hada toa assumea ratea increasesa fora each.a Fora example,a whena proposinga aa
salarya fora ana electriciana wea assumea thea electriciana receiveda aa standarda merita (raise)a ofa
3.25%a eacha year.a Therefore,a thata individual'sa salarya woulda havea gonea froma $75,000a toa
$77,438a thea seconda yeara anda $79,761a thea thirda year.a Witha 1400+a projecta personnel,a eacha
makinga differenta hourlya ratesa anda witha ~30a differenta releasea datesa overa aa 40a montha period,a
wea hada toa usea aa compoundinga futurea costa calculationa (similara toa thea compoundinga futurea
valuea calculation).a Ina addition,a whena calculatinga eacha totala salarya cost,a wea neededa toa adda ina
costsa associateda witha speciala paysa (i.e.,a hazardousa dutya pays,a weekenda pays).a Thea speciala
paysa werea negotiateda toa risea onlya oncea duringa thea 40a montha perioda ata montha 24.a Aa similara
exercisea hada toa bea donea fora subcontractors,a toa addressa theira futurea salarya anda materiala billinga
costs.a Oura directa purchasinga ofa materiala (i.e.,a toileta paper,a pumps,a PPE,a fuel,a naturala gas,a
caustics,a acids)a hada toa bea forecasteda also,a witha ana assumeda ratea increase.a Thea governmenta
alloweda certaina ratea increasesa fora groupsa ofa itemsa (i.e.,a officea suppliesa werea alloweda toa bea
estimateda witha aa 3%a ratea increase,a industriala equipment/partsa werea alloweda toa bea estimateda
ata ana 8%a increase,a anda fuela wasa assumeda toa bea ata aa 15%a ratea increase).
Thesea calculationsa alloweda usa toa proposea thea 40-montha Closurea schedulea usinga estimateda
costsa fora thea outera years.a Thisa alloweda thea government,a oncea negotiated,a toa budgeta viaa
Congressa thea propera amounta ofa dollarsa toa closea thea facility.a Ofa course,a thisa alloweda thea
associateda companiesa toa performa theira financiala plansa fora thea outera yearsa also.
Thea amounta ofa "government"a casha flowa fora thea negotiationsa impacteda usa aa greata deal.a Fora
example,a wea originallya proposeda toa thea governmenta aa fastera Closurea plan.a However,a baseda
ona politicala challengesa anda thea government'sa currenta 5-yeara budget,a concerna wasa raiseda thata
theya couldn'ta afforda thea fastera pace.a So,a wea wenta backa anda spreada thea worka anothera 6a
monthsa toa ensurea wea cana fita intoa thea currenta budgeta plan.
Aftera researchinga abouta thea Timea Valuea ofa Moneya (TVM)a concept,a Ia reallya understanda onea
ofa mya latea grandmother’sa coineda phrasesa “thata whicha isa ina youra handa isa whata isa trulya yours.”a
Timea Valuea ofa Moneya isa thea notiona thata moneya thata youa havea ina thea presenta momenta isa
wortha morea thana ita willa ina thea future.a Moneya thata youa havea accessa toa cana bea investeda ina
stocksa ora investmenta property.
Ia havea nevera hada toa usea anya TMVa calculations;a however,a Ia alwaysa thinka abouta whata Ia woulda
doa ifa Ia wona thea lottery.a Ia woulda opta fora thea lumpa suma upa front.a Fora example,a ifa thea payouta
wasa $250,000a upa fronta ora $10,000a aa yeara fora 25a years.a Wea cana clearlya seea thata thea $250,000a
woulda havea aa mucha greatera returna ifa investeda nowa thana ata thea enda ofa thea 25a years.a Ifa wea
liveda ina aa fairy-talea worlda wherea therea wasa aa thirda optiona ofa receivinga thata $10,000a ata 8.5%a
interesta compoundinga fora 25a yearsa thena ita woulda bea aa totallya differenta ballgame.a Usinga thea
formula,a FVA=P(1+r/n)^a nta thata samea 10ka woulda bea earninga $76,876.62a totala ina interesta ata
thea enda ofa 25a years.a Thena anda onlya thena mya choicea woulda bea option#1a ora #3a dependinga ona
ifa Ia cana afforda toa waita 25a years.
a
Timea valuea ofa moneya isa importanta becausea ita helpsa families,a investors,a anda peoplea savinga
fora retirementa determinea howa toa geta thea mosta banga fora theira bucka soa toa speak.a Thea factora isa
determineda bya thea numbera ofa periodsa thea casha flowa willa bea impacteda asa wella asa thea expecteda
ratea ofa interesta fora thea period.a Timea valuea ofa moneya worksa ona thea principlea thata moneya
todaya isa wortha morea thana thea samea amounta ofa moneya receiveda ina thea future.a Therea area fivea
majora componentsa ofa timea valuea anda theya are:a rates,a timea periods,a presenta value,a futurea
value,a anda payments.Ia ama aa daya tradera ona thea marketsa toa somea degreea anda asa sucha Ia investa
intoa equitiesa thata ia havea deemeda toa bea aa gooda risk.a Thata beinga saida froma timea toa timea Ia willa
comea acrossa aa smalla windfalla ina somea trades.a Whena thisa happensa Ia reviewa mya optionsa ofa
upcominga possibilitiesa ina thea marketa asa wella asa othera potentiala opportunities.a Toa thosea
opportunitiesa Ia willa takea aa knowna ratea ofa returna anda extrapolatea intoa thea equationa thea timea
willinga toa holda thea casha ina aa particulara fund.a Bya usinga TVM,a asa stateda above,a Ia ama ablea toa
makea wisea calculateda decisionsa .Asa Ia employeda thea abovea activitiesa toa mya casha gained,a Ia
havea founda thata Ia cana bettera managea mya gainsa anda lossesa bya priora pre-planninga bya usinga
TVM.a Ina 2017a Ia hada aa goala toa starta savinga upa fora mya 1sta investmenta property.a Thea issuea wasa
thea lacka ofa sufficienta fundsa fora thea downa payment.a Upona lookinga furthera intoa whata Ia wanteda
toa buya anda wherea thea estimatea ofa thea downpaymenta wasa ofa $50000.a Tryinga toa figurea outa
howa toa makea thisa happena Ia camea acrossa aa banka thata offereda 6%a interesta ratea ona deposits.a
Lookinga intoa thisa asa ana optiona Ia useda thea concepta ofa TVMa toa finda outa thea presenta valuea ina
ordera toa geta aa fixeda futurea value.a
Mya calculationa asa followed;a Interesta ratea 6%,a PERIODa 5a Y,a FV($50000),a PVa (6%,a 5,a 0,a
50000).
Thea resultsa werea thata Ia hada toa deposita $37362.91a ina thea banka anda ita woulda takea 5a yearsa ina
ordera fora thata amounta toa growa toa thea $50000a Ia neededa fora mya investmenta property.a Ia didn'ta
enda upa takinga thisa optiona mainlya becausea housea pricesa onlya seema toa goa upa anda ina fivea yearsa
thea amounta ofa thata propertya ifa ita stilla happeneda toa bea arounda woulda havea beena mucha highera
buta Ia dida usea TVMa ina ordera toa checka ifa thata banka offera coulda bea ana optiona fora me.a
Timea valuea considersa thea effecta ofa compoundinga anda givesa usa valuea ofa moneya thereforea
witha aa casha ouflowa ofa $37362.91a todaya lockeda ina fora 5a yearsa asa deposita Ia coulda havea
receiveda ana inflowa ofa $50000a witha compoundinga ofa 6%a interesta annually.a Ana examplea ofa aa
situationa whena Ia useda thea timea valuea ofa moneya (TVM)a calculationsa toa supporta aa financiala
decisiona eithera ina youra professionala ora personala lifea woulda bea thea timea mya sistera anda Ia hada
broughta aa fewa trailera homesa anda tooka aa mortgagea toa buya thea investmenta property,a thea timea
valuea ofa moneya equationa isa thea presenta valuea ofa alla ofa thea paymentsa Ia willa needa toa makea
overa thea terma ofa youra mortgage.
Thea TVMa calculationsa youa useda toa supporta thea financiala decisiona anda thea benefitsa thisa
provideda isa ina thea timea valuea ofa money,a ora "TVM,a isa thea ideaa thata samea amounta ofa moneya
hasa differenta valuesa ata differenta timesa fora example,a fivea dollarsa ina youra pursea today,a isa nota
thea samea asa fivea dollarsa aa dozena yearsa froma now.a Aa homea mortgagea isa aa greata frameworka
fora understandinga TVM.a Youa cana calculatea thea futurea valuea ofa aa mortgagea bya usinga thea
formulaa Pa =a principala balance.a Ra =a interesta rate.a Na =a numbera ofa timesa interesta isa
compounded.
a
Thea casha flowa impacteda mya decisions,a whicha isa soa importanta toa lenders,a thata thea casha flowa
providesa lendersa witha aa picturea ofa mya businessesa witha thea trailera homesa anda abilitya toa paya
backa aa loan.a Ina othera words,a ita showsa thata mya businessa bringsa ina enougha moneya toa covera thea
costsa ofa anya currenta debta oura businessa hasa ina additiona toa thea costa ofa aa newa loan.
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