Reply to question of my discussion on Time Value of Money Applications

finance discussion question and need the explanation and answer to help me learn.

Hey there, I received a question from my tutor regarding the discussion that I posted.
please read the attached discussion, and make reply to the question below.
Q1- In what ways can the time value of money be used to assess the long-term financial health of a business?
Please separate the answer on a separate file.
Word limit: 150 to 200.
Important:
Please note that it is important to include sufficient references in the work and ensure zero plagiarism.
Requirements: Word limit: 150 to 200.
Hey there, I received a question from my tutor regarding the discussion that I posted.
please read the attached discussion, and make reply to the question below.
Q1- In what ways can the time value of money be used to assess the long-term financial health of a business?
Please separate the answer on a separate file.
Word limit: 15 to 200. Please do not exceed the limit
Important:
Please note that it is important to include sufficient references in the work and ensure zero plagiarism.
Please see below the discussion below:
Time Value of Money Applications
The concept of the time value of money refers to the fact that money loses value with time due to inflation. This is true because a Riyal today would have a different value than a Riyal in a year. It is true because the prices of goods increase over time (Keown, Martin & Petty, 2017).  Similarly, if the amount is invested, it will earn some interest during the period, meaning the value will increase. The concept of the time value of money is vital to financial managers because it is the basis for deciding how to invest money. Financial managers’ critical decision entails deciding whether to invest, spend, or save money. The spending decisions need to consider the various returns from different projects and select the best ones (Keown, Martin & Petty, 2017). Besides, finance managers can evaluate returns from using the money to finance a capital project or returning from saving the money in a bank account. The project with the best returns should be considered.
A good example is if someone who owes you 50,000 RAR commits to repay you in a year. This would be an underpayment because the 50,000 would have grown in value if put in a savings account with 10% interest compounded annually. The future value of 50,000 RAR in a year is (50,000*(1+10%) = 55,000 RAR. You would have lost 5,000 RAR for the one-year waiting period. The amount forgone would be significant if the repayment is in two- or three years.
The Saudi people need to understand the concept of the time value of money as the country moves closer to achieving Saudi Vision 2030. This is because the primary objective of Saudi Vision 2030 is to create an enterprising economy where people have a high chance of succeeding. This involves completing an enabling business environment for increased investments. Understanding the concept of the time value of money will make it possible for people to have the ability to analyze the possible investment options and consider the best alternatives (Hanif, 2019). The time value of money concept utilized the present value factor to discount future cash flows.
The article by Ahmad and Hassan (2006) examines the concept of the time value of money about Shari’ ah. The findings show that Shari’ ah does not prohibit the increase in the loan value to cater to variables like inflation. This is to make it possible to use the amount to purchase the same commodity or investment in the future. When entering into a future sell agreement, there is a need to consider the time value of money for an increase in prices due to inflation.
 
References
Ahmad, A. U. F. and Hassan, M. K. (2006)., The time value of money concept in Islamic finance. The American Journal of Islamic Social Sciences 23:1. 
Hanif, M. (2019). Islamic mortgages: Principles and practice. International Journal of Emerging Markets, 14(5), 967-987. Retrieved from https://doi.org/10.1108/IJOEM-02-2018-0088
Keown, A. J., Martin, J. D., & Petty, J. W. (2017). Foundations of finance. United Kingdom: Pearson Education Limited.
Hey there, I received a question from my tutor regarding the discussion that I posted.
please read the attached discussion, and make reply to the question below.
Q1- In what ways can the time value of money be used to assess the long-term financial health of a business?
Please separate the answer on a separate file.
Word limit: 150 to 200. Please do not exceed the limit
Important:
Please note that it is important to include sufficient references in the work and ensure zero plagiarism.
Please see below the discussion below:
Time Value of Money Applications
The concept of the time value of money refers to the fact that money loses value with time due to inflation. This is true because a Riyal today would have a different value than a Riyal in a year. It is true because the prices of goods increase over time (Keown, Martin & Petty, 2017).  Similarly, if the amount is invested, it will earn some interest during the period, meaning the value will increase. The concept of the time value of money is vital to financial managers because it is the basis for deciding how to invest money. Financial managers’ critical decision entails deciding whether to invest, spend, or save money. The spending decisions need to consider the various returns from different projects and select the best ones (Keown, Martin & Petty, 2017). Besides, finance managers can evaluate returns from using the money to finance a capital project or returning from saving the money in a bank account. The project with the best returns should be considered.
A good example is if someone who owes you 50,000 RAR commits to repay you in a year. This would be an underpayment because the 50,000 would have grown in value if put in a savings account with 10% interest compounded annually. The future value of 50,000 RAR in a year is (50,000*(1+10%) = 55,000 RAR. You would have lost 5,000 RAR for the one-year waiting period. The amount forgone would be significant if the repayment is in two- or three years.
The Saudi people need to understand the concept of the time value of money as the country moves closer to achieving Saudi Vision 2030. This is because the primary objective of Saudi Vision 2030 is to create an enterprising economy where people have a high chance of succeeding. This involves completing an enabling business environment for increased investments. Understanding the concept of the time value of money will make it possible for people to have the ability to analyze the possible investment options and consider the best alternatives (Hanif, 2019). The time value of money concept utilized the present value factor to discount future cash flows.
The article by Ahmad and Hassan (2006) examines the concept of the time value of money about Shari’ ah. The findings show that Shari’ ah does not prohibit the increase in the loan value to cater to variables like inflation. This is to make it possible to use the amount to purchase the same commodity or investment in the future. When entering into a future sell agreement, there is a need to consider the time value of money for an increase in prices due to inflation.
 
References
Ahmad, A. U. F. and Hassan, M. K. (2006)., The time value of money concept in Islamic finance. The American Journal of Islamic Social Sciences 23:1. 
Hanif, M. (2019). Islamic mortgages: Principles and practice. International Journal of Emerging Markets, 14(5), 967-987. Retrieved from https://doi.org/10.1108/IJOEM-02-2018-0088
Keown, A. J., Martin, J. D., & Petty, J. W. (2017). Foundations of finance. United Kingdom: Pearson Education Limited.

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