Most business ventures involve utilisation of other people's money. The proper sourcing of funds and the optimum utilisation of the funds, so raised play important role in the successful conduct of financial management. The main problem in financial management is that the funds are raised at different points of time and are employed into the business at different points of time. Matching the timings of rise of funds and the employment of funds and optimizing the time related costs are very crucial for the success of a finance manager. In this context 'time value of money' becomes important.
Objectives
After studying this unit, you should be able to
- indicate the relevance of time value concept,
- know about capital and money markets,
- analyse reasons for having interest,
- use the interest rate formulae and acquaint yourself with the applicability aspects of time value concepts, and
- work out problems involving time value of money concepts arid use the time value tables.
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