Time Value for Money

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FINA310

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Introduction

In finance, assets can be quantified regarding future value if an interest or discount rate is attached. A good example is valuing money today and considering how much it is worth on a future date. Banks deposits can also be treated through future valuation processes by calculating the amount of money an account holder will have on a particular data. To achieve this financial calculation, one would have to consider the principal amount deposited and the interest rate offered by the bank for the target period, like two years, and also consider if the bank charges any service fees (Klausner, 2003).  The future value of assets such as cash can also fall under savings, mortgage payment, and insurance payment, among others. These aspects constitute an annuity's future value, which means the value of recurring deposits or remittances grows at a particular rate (Lobo, 2023).  This paper looks at different scenarios of cases provided by offering calculations and explanations based on the information available in different case studies.

Based on the first scenario:

Answer the following question utilizing the Future Value of an Annuity calculator:

If Sally’s account compounds monthly, calculate how much Sally will have in her savings account:

1. In 10 years?

She deposits $100 every Saturday.

Interest rate 8%

By making a deposit every Saturday, Sally will have made 54 deposits in one year. This will translate to 540 deposits in 10 years. Compounding the interest rate monthly, Shall will have $ 825,937.33 in her account by the end of 10 years.

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