busn602-discussion-response
Hello,
I need three responses of at least 150 words each for the below students discussions for this week. Also in the bold below are the questions the students at answering.
Position 1: It is only necessary to understand how to use the technological tools to perform calculations.
Position 2: It is important to understand the calculations for FV and PV of monetary sums.
This is a juxtaposition discussion question. Choose a side. If you choose the green side, find material to support your response…but you also have to find a way to resolve the counter-side on RED. If you choose the red side, find sources to help support your position…but you also have to resolve the counter-side on GREEN. Your response should be 300 words and include attribution/references other than the textbook. Here are two quick videos about attribution and giving credit to sources used to support opinions.
Student one:
We live in a very capitalist global economy and every cent in the financial is invested in one thing or another. So the question that comes to mind. What do the banks do with your funds when deposited? You are given a .002% interest rate on your money but how do the bank remain profitable? The answer to that is understanding the principles of future and present value of monetary sums.
Future value is defined as the value of funds at a particular date in the future or a certain period of time and present value of the current worth of a future cash slow. In other words the current value of funds at any determined moment.
it is important to understand the future value and present value because
1. Helps understand you rate of return on an investment. If you invest $100 today what will it worth in 3 years? we look at various statements in relation to which company we will like to invest. Is this company known for having a positive cash flow every year and what dividends etc. These questions enables and investor from private to large corporation determine which investment to procure.
2. Helps in understanding the risk in relation to return on investment.
3.Forecast cash flow based on the predicted cash flow. Remember there is always a projected cash flow and actual cash flow to see if expenses were below or exceeded budgeted cash. This also helps in projected future budgets. We use this in our everyday transactions; which banks give the best interest rate on saving, loans and which credit cards have zero APR etc.
4. Also i helps understand purchasing power of funds at any given moment. In other words $100 today will not will procure the same amount of shares tomorrow. What is $100 worth today? This is determination of the purchasing power, to enable decision on what to buy now or save for later.
On the other hand we do need technology to facilitate the calculation of these values. These value are usually large in number from personal budget to cooperation balance sheets. While it facilitates the calculation of these values, the underlying principles remain the same; it is important to understand the present and future value.
References:
Woodruff, J. and Seidel, M. (2019). Future Value vs. Present Value. [online] Smallbusiness.chron.com. Retrieved from: https://smallbusiness.chron.com/future-value-vs-pr… [Accessed 12 Nov. 2019].
Present Value vs Future Value: 6 Best Differences (With Infographics). (2019, September 13). Retrieved from https://www.educba.com/present-value-vs-future-val…
Student two:
“Future value and present value are monetary concepts that a business owner uses every day, whether he realizes it or not. The idea is simple: Money in your pocket today is worth more than the same amount received several years in the future (Woodruff, 2019, para 1). I agree with position two, it is important to understand the calculations for Future Value and Present Value of monetary sums. If you do not understand the calculations, can you really use the technological tools correctly? It is important to understand the meaning of the calculations output and how to perform the math manually. This will allow you to be sure you are using the technological tools correctly and ensure you are making wise financial decisions for your company.
Alternatively, I can understand why some people would agree that it is only necessary to understand how to use the technological tools to perform calculations. We are not all going to be business owners or accountants that need to fully understand how the equations are calculated. “Companies small and large use advanced software programs to manage accounting and finance tasks. In fact, companies often use programs that sync accounting with point-of-sale terminals and bookkeeping programs, such that each purchase or sale transaction is automatically captured in an accounting platform. Using technology to manage financial record-keeping minimizes manual processes, reduces costs and helps protect against human error (Kokemuller, 2019, para 10).” Technology is a great thing and its advancements are helping us perform task more efficiently and effectively.
Again, I support position two and believe it is extremely important for Business owners, leaders, and financial personnel to understand the calculations for Future Value and Present Value of monetary sums. Without having a good understanding of these concepts, it would be hard to make good financial decisions for your company or be sure your records are accurate.
Kokemuller, N. (2019, August 8). Why Is Technology Important in Business? Retrieved November 13, 2019, from https://bizfluent.com/about-6320228-technology-imp…
Woodruff, J. (2019, January 25). Future Value vs. Present Value. Retrieved November 12, 2019, from https://smallbusiness.chron.com/future-value-vs-pr…
Student three:
Present value (PV) and future value (FV) are monetary concepts that businesses use on a regular basis. The calculations for these concepts can seem to be quite daunting at first glance, but with real understanding of each part of the equation, understanding the process becomes simpler (Woodruff, 2019). One of the side effects of a technologically advancing world is the ability for someone to take a task or method, such as calculating PV or FV, that once took someone five or even ten minutes to complete by hand and create an automatic formula in an application such as Excel and make it an almost immediate act. The ability to simplify a once difficult task is basically a goal for anyone who has spent the time to learn the more difficult hand-written way. However, although this is the ultimate goal, I think that it is always more important for an individual to first learn the “hard” way of finding the answer to a question, by utilizing the equation created to do so by hand, master that skill, and then move on to using an easier method such as an Excel formula. This is mainly because it is always important to have a strong base foundation to stand on when it comes to understanding the way that the formula works and how the information is plugged into that formula. When someone is given the simpler method of finding the answer first, they may not always completely understand the purpose of all the parts of the equation and if ever presented with a moment where the equation is not readily available, they may not even be able to find the answer using the original formula. Technology, while amazing and helpful, can also be seen as a crutch. With that, by having a good and clear understanding of the calculations for FV and PV, one can then begin to understand and utilize the technological tools to perform the calculations for FV and PV in a more efficient manner.
References
Woodruff, J. (2019), Future Value vs. Present Value. Retrieved November 12, 2019, from https://smallbusiness.chron.com/future-value-vs-present-value-77714.html
