Explain The Time Value Of Money

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What is inflation risk? An inflation risk is where a price of a product may change, such as raising or lowering. It is risking to go buy something knowing the price ahead of time, but may change before or after purchasing. 2. What are opportunity costs? Give an example of an opportunity cost. Opportunity costs are where we may have to sacrifice something, in order to purchase what we want. For example; if I wanted to go purchase tickets to my favorite bands concert, that I had really been looking forward to, I may not be able to due to my budget. I’m also saving for a car so it may not be so beneficial to my savings if I blow a huge amount on a want instead of a need. 3. What is the time value of money? The time value of money is where a person can have a certain amount of savings, and estimates how much that savings account will increase over time due to your financial situation or regular income.…show more content…
What is future value? Future value is our full amount of income we inherit, plus the interest and amount of time that we will have. For example; if we start spending our savings on a bunch of things that we truly do not need, it can highly affect our interest amount and ruin our financial plans. 5. What is shared decision-making? Shared decision-making is where people come together to discuss or negotiate a financial plan or budget. This happens in situations such as newly wedded couples figuring out their future financial plans, families, or young teenagers purchasing their first apartment. This is a time where people are required to come together to sort their financial lifestyle. Critical Thinking
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