Time Value for Money

Financial Management
Time value of money implies that cash today is worth more than the same amount in
future. An investor would thus choose receiving a sum of money today than the same sum in
future. The earning power of money makes it to have a time value. For example, a company
promises to pay me 1000$ today or 100 dollars every month over the next 10 months, I will
choose to be paid in lumpsum today. If I am paid today, I could invest the amount or put it in a
fixed deposit account. The money will then earn some interest and this implies that by the end of
the 10 months, it will have increased. Assuming that the money is put in a fixed deposit account
with a 10% annual interest rate, then the money will accrue an interest of 83 dollars over the 10-
month period.
The time value for money calculation that was used in making the decision is that of
opportunity cost. A comparison being made between the two investments at the moment.
Opportunity cost is defined as the cost of the foregone alternative. In this case, if I chose to be
given the money periodically, then I will have lost the opportunity to put the money in a fixed
deposit account and earn interest. As a rational player, the lumpsum option is the best since it
maximizes my earnings.
Market Value
The company selected is Uber Technologies, Inc. the stock performance for the company
over the last years increased in the first quarter then declined at the end of the years to average
levels that have tried to remain constant. At the start of January 2021, the highest stock value for
the company was 38.6. However, there has been a persistent increase to a high value of 46.3 in
the mid of the years. Changes took place at the end of the quarter, where the value declined to a

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low value of 32.2. The fluctuation is in the stock value shows good and bad performance in the
different periods of the fiscal years. Investors can use the information in their investment
decisions.
The main factor of consideration might have been the COVID-19 pandemic at peak and
valley level. In the same year of 2021, the globe was experiencing a fluctuation in the third wave
of the pandemic. Some of the investors might have been pulling out from the company when the
infection rate rose and coming back when there was a decline. At the peak and valley, the
pandemic affects the business operations by either increasing or declining. However, the findings
indicate that the company’s financial health is optimized. There is an increase in resources
allocation towards research and development, and there is a viable shareholders equity.