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Time Value of Money With Evaly E-Commerce Business in Bangladesh
Time Value of Money With Evaly E-Commerce Business in Bangladesh
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Abstract
Time value of money (TVM) is one of the oldest formulas for finance, accounting, and other
quantitative analysis. The Talmud (~500 CE) recognizes the time value of money. This finding tried to
measure the system of Evaly E-commerce Business in Bangladesh and its working procedure. How
they gain huge profit using some simple & oldest theory of finance. With the TVM Evaly makes its
business area bigger and goes to the top of the industry.
Introduction
The Time Value of Money (TVM) means difference between the value of money in today and the value of
money in a future time period later. The time value of money is the idea that there is greater benefit to
receiving a sum of money now rather than an identical sum later. It is founded on time preference. The time
value of money (TVM) is the concept that money you have now is worth more than the identical sum in the
future due to its potential earning capacity. This core principle of finance holds that provided money can
earn interest, any amount of money is worth more the sooner it is received. TVM is also sometimes
referred to as present discounted value.
This principle allows for the valuation of a likely stream of income in the future, in such a way that annual
incomes are discounted and then added together, thus providing a lump-sum "present value" of the entire
income stream; all of the standard calculations for time value of money derive from the most basic
algebraic expression for the present value of a future sum, "discounted" to the present by an amount equal
to the time value of money.
For example, the future value sum FV to be received in one year is discounted at the rate of interest r to
give the present value sum PV:
𝑭𝑽
𝐏𝐕 =
(1 + 𝒓)𝒏
The following formulas use these common variables:
A simple finance theory becomes a blessing for Asian number one firsts’ growing e-commerce business.
By the use of this TVM theory, they increased huge revenue from Bangladesh. In Bangladesh, Evaly
creates a questioned offer system with an attractive marketing policy.
For example, Evaly offered a 50% discount offer for a motorbike Maximum Retail Price (MRP) at market
Tk. 2,00,000/- with limited stock and other T&C applicable.
1. Now a person takes the offer, he paid full amount Tk. 2,00,000/- in advance to get the motorbike.
And the customer gets it 6 months later after he paying for it. Here is how to work TVM:
In above situation: PV=200000; let interest rate (i) = 0.05/2=0.025 (as inflation rate); n=1/2
FV = PV. (1 + 𝑖)
.
FV = 2,00,000. (1 + 0.025 )
FV = 2,02,484.57
So, (𝐹𝑉 − 𝑃𝑉) = 2,02,484.57-2,00,000=2,484.57; Here in six month Evaly gain Tk. 2,484.57/-,
Not only that Evaly gets the rest of the amount with its marketing strategy & finance TVM
theory.
The customer who gets the motorbike he thought that he paid Tk. 1,00,000/- and he can get the
rest of the amount, Actually the customer has to expense the rest of the discounted amount at
Evaly wallet & he advanced paid for it.
2. Now the second consequence is when Evaly offer the discounted product the people try to
consume it and the paid for it. Causes of the limited stock of products most of them do not get it.
If for the motorbike offer 10 customers try to get it, then they do not get it. If from the entire
population 11 people, try to get the product and 10 of them did not get the motorbike. The profit
amount of the first consequences will be 10 times bigger than the second consequences. More
revenue & more profit with less capital & less risk.
3. The third consequence by hold the money from the customer, Evaly increases their operating
capital as well as the assets.
Reference
Time Value of Money (TVM) | Wikipedia: https://en.wikipedia.org/wiki/Time_value_of_money
Short note of TVM: https://www.investopedia.com/terms/t/timevalueofmoney.asp