Learning Tasks and Assessment 3.

a. Why is time value of money an important concept in finance?

Time value of money is a gainful idea that enables us to comprehend what money is
worth as far as time. It comprises of a formula that is normally utilized by financial
backers to acquire understanding into the value of money in accordance to its future
worth. The significance of time value of money depends on deciding on how time affects
the value of money .

b. Discuss the concept of future value and present value

Present value is the sum of money that must be invested in order to achieve a specific
future goal. Future value is the dollar amount that will accrue over time when that sum is
invested. The present value is the amount you must invest in order to realize the future
value.
Present Value and Future Value concept is gotten from the time estimation of cash
and its money related idea use by entrepreneur or financial backers consistently. It is a
straightforward thought that whatever cash got today is worth more than cash to be
gotten one year from now or some other future date. It is imperative to compute the time
estimation of cash so the financial backer can recognize the value of speculation that
offers them various returns at an alternate time.
2. You have applied for a job with a local bank. As part of its evaluation process, you
must take  an examination on time value of money analysis covering the following
questions:
a. Draw time lines for (1) a Php100 lump sum cash flow at the end of Year 2;  (2) an
ordinary annuity of Php100 per year for 3 years; and  
(3) an uneven cash flow stream of -Php50, Php100, Php75, and  
Php50 at the end of Years 0 through 3.
B. 1. What’s the future value of Php100 after 3 years if it earns 10%, annual
compounding? (Use the formula approach in solving show your solutions)  2. What’s the
present value of Php100 to be received in 3 years if the interest rate is  10%, annual
compounding? (Use the formula approach in solving show your  solutions)