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MBA Finance Assignment

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MBA Finance Assignment

MBA Finance Assignment


MBA Finance Assignment Support TVM, APR and EAR

Time Value of Money Concept (TVM)

Time is worth the money, due to the influence of inflation today is more valuable than the dollar. In other words, money is worth the time, because today money is more valuable in earning money in the future. There are some other reasons which show why money is worth the time. The individuals prefer current consumption in terms of save or invest the money to future consumption due to gaining satisfaction from consuming goods and services. Since a dollar that is invested today has power to increase or grow over time due to a fixed rate of return on investment (Lewis, McGrath & Seidel, 2010). 

other words, money is valuable because of the effects of inflation today is more valuable than the Time is worth the money, due to the influence of inflation today is more valuable than the dollar. In dollar

In other words, money is worth the time, because today money is more valuable in earning money in the future. There are some other reasons which show why money is worth the time, because money is more valuable today in earning money in the future. There are some other reasons which show why money is worth the time

Accelerated Assignment According to experts, there are some real life scenarios in which time value of money concept can be applied. For example, the time value of money concept can be applied by individuals and firms in decision making, personal investment decisions, capital budgeting decisions, and decision-making tools in addition to retirement planning. 

Difference between APR and EAR 

The annual percentage rate (APR) refers to a simple interest rate that does not consider the effect of interest compounding while paying interest over one year. On the other hand, the effective annual rate (EAR) refers to a real or compound interest rate that considers the circumference of interest during the calculation. Simultaneously, APR is used to specify the interest cash flow related to the loan, mortgage or bank savings account, while EAR is used for the return of opportunity cost or financial instrument (Melcher and Norton, 2010) . 

EAR is more relevant for financial decision-making, as it is helpful in measuring or determining the actual annual return to the lender. In addition, it reflects the effect of frequency on return or interest relative to APR, which is useful for the lender (Smart and Merinos, 2008) to make financial decisions. Required Law for Disclosure of APR 

Legal refers to a practice that adheres to all laws, regulations, rules and legal requirements set by the government, government regulatory bodies and courts of the country. There are various federal deposit insurance corporation laws, Rulewww.ozpaperhelp.com/siteadmin/blog.phps and legal requirements that require disclosure of APR to provide protection to consumers or lenders. The Federal Truth and Lending Law require APR financing disclosure to provide equality or regulatory approval among various credit sources (FDIC, 2012).

APR vs. EAR 

APR v. EAR means that due to the difference between these two interest rates, a consumer is being charged for two different rates. it is because; APR is a nominal interest rate that does not consider the premises of interest, whereas the EAR is an effective rate that considers the frequency in determining the interest amount (Melcher and Norton, 2010). Simultaneously, due to different purposes of borrowing or lending, the consumer is being charged for twodifferent interest rates. 

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