Analysis Investment

The cornerstone of investment analysis is what the time value of the money is known as. The theory is centered on the principle that the significance of the money is not on the worth but also the profit that can be made by investing sensibly.

If a person receives $15,000 today he or she will prepare to increase the future value of the money by supplying and acquiring the interest over time. If a person invests $15,000 over a period of three year he or she would receive the $15,000 plus whatever interest the money earned. If the person decided to take the $15,000 without investing the money, the person would lose any interest the money would have obtained over the three year period.

An example of this would be the impending value of investing at the end of the first year.

= ($15,000x0.045) +$15,000

= $15,675 this number would become higher after three years.

Owners and managers should know the importance of understanding the time value of money. Projects have cash flows that happen in the future. The planning of the cash flows in faraway enough in the future that a modification of the cash flows to their current values is imperative enough to be considered.

A person should be paid for the use of his or her money and also paid for the risk he or she takes when investing the money. When a person puts money into a bank he or she should receive an annual interest rate. The interest rate that is earned is usually left in the persons or business account so that the interest that was paid will also earn interest.

The benefit of completing this calculation using an Internet tool will help the calculation be more accurate and also let the person or business that is using the Internet tool be able to keep records of the calculation. Lotus and Excel have become popular because of the special functions that help make financial developing easier.

Undesirable aspects of miscalculating any of the figures could show the owner, manager, or business a negative...