The Time Value of Money

The Time Value of Money is a fundamental concept used in financial analysis. Explain why it is important for financial managers to understand and utilize the principles involvedf.

Provide an example that could be used to illustrate the concept to people who have not encountered the idea before.

Explain whether you consider it important for people generally to understand the concept as Saudi Arabia continues to move toward Saudi Vision 2030.

Search the SEU library or the Internet for an academic or industry-related article. Select an article that relates to these concepts and explain how it relates to doing business in Saudi Arabia.

For your discussion post, your first step is to summarize the article in two paragraphs, describing what you think are the most important points made by the authors (remember to use citations where appropriate). For the second step, include the reference listing with a hyperlink to the article. Do not copy the article into your post and limit your summary to two paragraphs. Let your instructor know if you have any questions and enjoy your search.

You are required to reply to at least two peer discussion question post answers to this weekly discussion question and/or your instructor’s response to your posting. These post replies need to be substantial and constructive in nature. They should add to the content of the post and evaluate/analyze that post answer. Normal course dialogue doesn’t fulfill these two peer replies but is expected throughout the course. Answering all course questions is also required.

E———-

This module has three primary topics: the valuation of a series of cash flows, return on investment, and the construction of an amortization schedule. Knowing how to use financial tools, understanding the premise of present and future value, and being able to analyze loan terms are important concepts for managers, leaders, and general daily decision-making. In this module, we will examine and evaluate formulas and variables to examine financing options and consider how changes in loan and payment terms can impact organizational effectiveness and your own personal financial management success. We will continue our work using both equations and an Excel spreadsheet. Make sure to read all of the required readings this week and complete the Check Your Understanding activity.

This week’s Discussion Question asks you why is it important to understand the concepts of inflation, present value, and future value of money as Saudi Arabia moves towards Saudi Vision 2030? What are some of the important terms and concepts that managers must understand in making decisions in today’s global environment? How will these factors affect Saudi Vision 2030?

You are required to reply to at least two peer discussion question post answers to this weekly discussion question and/or your instructor’s response to your posting. These post replies need to be substantial and constructive in nature. They should add to the content of the post and evaluate/analyze that post’s answer. Normal course dialogue doesn’t fulfill these two peer replies but is expected throughout the course. Answering all course questions is also required.

There is also a Live Session this week.

Finance principles for this module

  • Principle 2: Money Has a Time Value—Money received today is worth more than an equal amount of money received in the future.
  • Principle 3: Risk Requires a Reward—We don’t take additional risk unless we are compensated with additional return.

Learning Outcomes

  1. Describe the meaning of an ordinary and an annuity due.
  2. Calculate the present value and future value annuities.
  3. Calculate amortized loan scenarios.
  4. Calculate the present value of growing perpetuity.
  5. Acquire the skills necessary to use a financial calculator, mathematical formulas, and Excel spreadsheets.

Readings

Required:

Hanif, M. (2019). Islamic mortgages: principles and practice. International Journal of Emerging Markets, 14(5), 967-987. https://doi.org/10.1108/IJOEM-02-2018-0088

Keffala, M. R. (2020). How using derivative instruments and purposes affects performance of Islamic banks? Evidence from CAMELS approach. Global Finance Journal. https://doi.org/10.1016/j.gfj.2020.100520

Habibur, R. M., Faruk, A. M., Liza, G. P., & Mohammad, O. N. (2019). APPLICATION OF UMRA AND RUQBA IN DISBURSEMENT OF FAMILY TAKAFUL BENEFIT: AN ANALYSIS FROM ShARIAh PERSPECTIVE. Asian Academy of Management Journal, 24, 107-123. https://doi.org/10.21315/aamj2019.24.s1.8

Recommended:

Chapter 5 PowerPoint slides انقر لعرض المزيد من الخيارات SEU_FIN500_PPT_Mod05_Ch05.pptx – التنسيقات البديلة in Foundations of Finance – The Time Value of Money

STA Law Firm. (2019). Saudi Arabia: The Kingdom of Saudi Arabia’s new commercial mortgage law of 2018https://www.mondaq.com/saudiarabia/securitization-structured-finance/790224/the-kingdom-of-saudi-arabia39s-new-commercial-mortgage-law-of-2018

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