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13 December, 13:54

1. Wylie has been offered the choice of receiving $5,000 today or an agreed-upon amount in 1 year. While negotiating the future amount, Wylie notes that he would be willing to take no less than $5,700 if he has to wait a year. What is his TVOM in percent?

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  1. 13 December, 14:29
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    14%

    Explanation:

    The computation of the tvom in percentage form is shown below:

    Today price * (1 + interest rate) = Future value

    $5,000 * (1 + interest rate) = $5,700

    (1 + interest rate) = $5,700 : 5,000

    (1 + interest rate) = 1.14

    So, the interest rate

    = 1.14 - 1

    = 0.14 or 14%

    Hence, the interest rate or TVOM i. e times value of money is 14%
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