Finance Mod 2 Discussion Board

Finance mod 2 discussion board
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Personal discount rate
In July 2015 the total marketable rate for government securities in the U.S was 2.022 and this compared to 6.059 in July 2001 and 6.593 in July 2000 (Treasury Direct, 2015). The Treasury bill assumed to be the risk free rate was 0.099 in July 2015 and 0.06 for the 3 month US treasury yields (Bloomberg, 2015). My preference discount rate to receive $ 1,000 is at 7 % since this is higher that the risk free rate and takes into account the likely risk that I Will not be paid. Since they present value depends on the interest rate, number of periods (1 year) and Future value. As time go on, the present value declines, and as the interest rate increase the present value declines.
Given the option of receiving the $ 1,000 now or 1 year from now, highlights the importance of time element, decision-makers take into account choosing investment decisions. The time element allows one to invest and earn interest and there is an assumption that money that is not saved and invested is consumed. The time value concept shows that holding all things constant one would prefer to have money now rather than the future (Carther, n.d.). However, one also needs to take into account the ...