Time Value of Money Essay Example for Free

Time Value of Money Essay The application of the time value of money theory is very useful in the case of making a decision about obtaining a loan or rejecting it. According to the theory of time value of money, the rule of thumb for making down payment is: if your bank account pays lower rate than the loan, than use your money in the bank account as down payment. This rule is based on the realization of the fact that the value of the money which has been placed on the deposit is going to decline with time, and the percent rate on the deposit which the bank offers is not going to ensure that the value of the person’s money is kept on the same level. At the same time, the person could benefit from making a down payment for a car or any other object because the value of the money would reduce with time and thus he would be paying less for the object which he bought as the result of the loan. Despite the fact that the statements of the time value of money theory are obvious, the author of the article â€Å"Should You Pay Cash for a New Car?† in Los Angeles Times seems to regard all of the issues connected with consumer loans in a different light. Most of the points which he makes in the article are either completely incorrect or need to be altered in order to correspond with the statements which theory of time value of money makes. First of all, the author marks that it is always much better for consumers to obtain loans at the bank instead of investing their own money which they have in deposits. He mentions that consumers did not have computers in order to calculate the benefits of obtaining loans. If they had, â€Å"they might otherwise have seen the advantage in borrowing without taking anyones word for it†. However, as the rule of thumb states, it is profitable to make a down payment for the loan only in that case when the bank account pays a lower rate than the loan. The author does not take this rule into consideration and makes a statement that all of the consumers need to obtain loans, despite the differences between the rates of interest on deposits and loans. The point of view which he is trying to express is that no matter what, obtaining a loan will always be the best possible solution for the consumer. The author mentions the rule which Frank Sperling, vice president at Security Pacific National Bank gives in order to guide consumers in making a choice for or against consumer loans: if a consumer is able to obtain at least half of the interest rate on the investment in comparison with the interest rate on the loan, he is going to make a correct choice by obtaining a loan. This rule is quite similar to the rule of thumb which is being used in the theory of time value of money but it is too concrete of a case. It is impossible to make a conclusion about the interest rate on investment being exactly half of the interest rate on the loan for the deal to be beneficial for the consumer. The benefits of the consumer can be relatively larger if the gap is increased but the consumer can make a down payment for the item which he wants to buy whenever the rate on the loan excesses the yield on investment. The author also states that there can be differences between the rule applications for different types of loans but it is not true because the rule can be applied for any type of loan. It is based on the general objective principles on the theory of time value of money which are universal. Besides, the approach which the author describes does not work in any economic environment. The consumer needs first to realize in what environment the country’s economy is functioning at this point. This can be either the environment of increasing interest rates or of decreasing interest rates. If the interest rates are going to decline in the future, the consumer will need to consider an option of refinancing the loan in the future. If the interest rates are increasing, the consumer might think of obtaining a loan with a lower interest rate now and investing his funds in securities which a higher interest rate in the following periods of time. He also needs to consider the possibilities of obtaining a fixed interest rate for the loan in order to ensure that his payments on the loan are not increasing and invest in floating-rate securities in order to benefit from the interest rate fluctuation in the future. Without the analysis of the economic environment, there is no possibility to make a conclusion about the best possible way of buying a car or any other item. The author also makes an incorrect statement that the major difference between making an investment and obtaining a loan is that the percent rate is calculated on a different basis. According to him, the percent rate on the loan is being compounded only annually and the rate of interest on the investment can be compounded monthly: â€Å"Keppel†¦ calculated that 48 months of interest on a 14.2 percent loan of $8,239.05 would be $2,607.62, while the same principal invested at 8 percent, compounded monthly would earn interest of $3,095.06- a profit of $487.44†. However, this rule is going to be true only in the case when both the loan and the investment have the mentioned characteristics. It is not the general case because interest rates on loans as well as on any other assets can be compounded in any number of ways. It is impossible to say that the investment is going to bring profits to Keppel only due to the different techniques of interest calculations because it is very far from the truth. The question is whether he will be able to obtain the loan and make the investment according to the terms which are favorable for him. The author of the article has expressed complete ignorance in the knowledge of the finance and particularly their theory of time value of money. In order to make a correct decision about the way of purchasing an item, consumers need to make sure they take all of the issues of this theory into consideration.

augustine :: essays research papers

Augustine "I loved the happy life but I feared to find it in Your house and so I ran from it even as I sought after it. I thought that I would be miserable if I were kept from a woman's arms. I did not believe that a cure for this disease lay in Your mercy; I had no experience of such a cure. I believed that continence was within a man's own powers, though I was unaware of such a power within me. I was a fool and did not know - as it is written [in Scripture] - that no man can be continent unless You grant it to him. And this You surely would have given to me if, with inward groanings, I had knocked at your ears and with a firm faith had cast my many cares upon You." (from The Confessions, Book 6, Chapter 11, circa 397-400 A.D.) Augustine was born in A.D. 354 in the town of Thagaste in Algeria. His father was a pagan and his mother was a devout Christian. Augustine was educated as a rhetorician in the former North African cities of Tagaste, Madaura, and Carthage. Augustine died in A.D. 430 identifying himself as the supreme â€Å"doctor of grace.† Augustine is, arguably, the greatest theologian-philosopher of all time. Some elements of Platonism can be seen in Augustine’s teaching. His view of the world is Platonic, there is the outer and the inner world, the lower and the higher, the sensible and the intelligible, and the carnal and the spiritual. To become wise requires a movement of the mind inwards and upwards to God, an opening of the mind to truth which provided the mental vision that has been purified by faith. His theme of the divine in the world and in man is more biblical than Platonic, which allowed him to regard the material world with a reverence that would be impossible for a Platonist. His doctrine of evil as no-thing, a privation, is different from both Platonic thought and Manichaeism. A philosophical question faces Christians, and in fact all theists, that challenges the belief in God. To theists, God is an omnipotent, perfect God. He is good. Theists accept this, and embrace it, for how else can they worship God and give their lives to Him unless He is good? However, in this world, everything is consumed by evil. If God is the author of all things in this world, and he is good, theists must then ask themselves what is evil and where it came from.

Business & Human resource

In today’s competitive world, where there is increased competition in the industry. Human resource management and recruitment has proven to be the most effective tool that provides with a competitive advantage, which cannot be matched or countered by any other competitor. Human resource of any company is the key to success and its sustainable development in the coming years. Therefore it is essential for all the corporations to take into account the immense power of their human resource and to make genuine efforts in order to retain them. For that the main area to be targeted is motivation.In that case it is necessary to evaluate the psyche of all the employees. Motivation is the driving force that makes a person achieves the desired goals in an affective manner. In the past years a lot of research work has been done on the topic of motivation. Because only if a person is willing to perform any task, he will be motivated to do it. As depicted by the saying that one can take hi s horse to the water but cannot force him to drink it unless he wants to. Such is the phenomenon of motivation. Motivation has a very prominent role in the field of business. As all humans are complex beings. All of them have different requirements.It is extremely important for the firm to set up such an environment that promotes the talent of the employees and utilize their potential in an efficient manner. In order to keep the employees intact and promote an organizational culture which is healthy. It is required that the leadership carefully works on job design. Job design is the process in which different elements are join together to form a job in which individual as well as organizational requirements are kept in mind . While designing a job description it is very important that they company is aware of and concentrates on the fact that what they want to achieve.If the employees are aware of their job description and are provided with the right resources and culture, the compa ny is able to achieve its goals. And also maintains the standards at the same time. In such a situation employees are motivated to put in their best and to take their work to further level of excellence. Motivation is one factor that is extremely difficult to attain. But on the other hand those firms that have been successful in motivating their employees have also earned value addition form their talented and skillful employees.Most of these researches of motivation in management have been derived from the discipline of psychology. Since psychology is the study of human mind and behavior. These theories have proved to be very effective in use in all the fields of management. A few of these theories related to motivation are described bellow. Abraham Maslow was a famous psychologist and was also known as the father of modern management. He in his article â€Å"A Theory of Human Motivation† formulated a framework of human motivation and drives on the basis of their needs†¦ The table below depicts the hierarchy of these human needs in order.1) Psychological needs: they are recognized as the primary needs of every individual that are essential to be fulfilled. They are required for survival. They comprise of necessities like food, shelter, sleep, water etc. 2) Safety Needs: as soon as the psychological needs are met, ones attention is diverted towards fulfilling the security needs. Every person has some insecurities may it be physical or emotional. According to Maslow until and unless these needs are addressed and resolved a person would feel threatened and would not climb up any further on the pyramid.3) Social Needs: this is the first level of higher level of needs. It involves the interaction and relationship with a society, family or social group. 4) Esteem Needs: esteem needs include self-respect, self worth, recognition and achievement. 5) Self-Actualization needs: realizing personal potential, self-fulfillment, seeking personal growth and peak experiences Maslow’s ideas regarding the hierarchy of needs provides information about workplace environment that encourages and enables employees to attain their potential that is self actualization.Managers can use these to encourage personal growth and development. Douglas McGregor’s Theory X and Y were a basis of development of positive management styles and techniques. And prove to be helpful in development of organizational development and culture within the organization. It clearly defines two different methods of management control. One is the classic and conventional authoritative management style and the other is the modern a participative style. Companies’ can chose either of them but theory Y or the participative style has been more effective in motivating the workforceBecause these theories help us understand the psyche of human mind which in turn can be helpful in developing the job description. And if the job design would be good enough than this would motivate employees to work harder and bring in innovation. In this world where nothing is stagnant and environment changes, such steps are all effective in helping a company cope with these changes and to conquer new market with fresh ideas. All these theories are a guiding force to manage employees and their talent. Motivation is essential at all levels.It is a complex combination of several factors. Motivation leads to efficiency, profits and loyalty. It can make the impossible possible. Employees need to feel respected and valued in the company. This gives them a sense of belonging. Adopting sensible job designs for the workforce can only bring about this change. It is the responsibility of the leadership to make such job descriptions that help utilize the potentials. Theory Y shows that management styles empower and have a significant impact on workforce motivation.Works Cited Abraham Maslow. (n. d. ). Maslow Hierarchy of Needs. November 14, 2008. Retrieved from: < http:// www. abraham-maslow. com/m_motivation/Hierarchy_of_Needs. asp> Businessballs. com. (n. d. ). Maslow’s hierarchy of needs. November 14, 2008. Retrieved from: < http://www. businessballs. com/maslow. htm> Job Access. (n. d. ). Job description and design. November 14, 2008. Retrieved from:

What Are U.S. Farm Subsidies and Why Do They Matter

Farm subsidies, also known as agricultural subsidies, are payments and other kinds of support extended by the U.S. federal government to certain farmers and agribusinesses. While some people consider this aide vital to the U.S. economy, others consider the subsidies to be a form of corporate welfare. The Case for Subsidies The original intent of U.S. farm subsidies was to provide economic stability to farmers during the Great Depression to ensure a steady domestic food supply for Americans. In 1930, according to the USDA Census of Agriculture Historical Archive, nearly 25 percent of the population, or roughly 30,000,000 people, lived on the nations nearly 6.5 million farms and ranches. By 2012 (the most recent USDA census), that number had dwindled to about 3 million people living on 2.1  million farms. The 2017 census is predicted to indicate even lower numbers. These numbers assume its more difficult than ever to make a living farming, hence the necessity of subsidies, according to proponents. Farming a Booming Business? That does not necessarily mean that farming isnt profitable, According to an April 1, 2011, Washington Post  article: The Agriculture Department projects net farm income of $94.7 billion in 2011, up almost 20 percent over the previous year and the second-best year for farm income since 1976. Indeed, the department notes that the top five earnings years out of the past 30 have occurred since 2004. The most recent numbers, however, are not as rosy.  Net farm income for 2018 is predicted to be the lowest since  2009, down to  $59.5 billion, a $4.3 billion decrease from  2018. Yearly Farm Subsidy Payments The U.S. government presently pays about $25  billion in cash annually to farmers and owners of farmland. Congress legislates the number of farm subsidies typically through five-year farm bills. The last, The Agricultural Act of 2014 (the Act), also known as the 2014 Farm Bill, was signed by President Obama on Feb. 7, 2014. Like its predecessors, the 2014 farm bill was derided as bloated pork-barrel politics by a plethora of Congress members, both liberals, and conservatives, who hail from non-farming communities and states. However, the powerful farm industry lobby and members of Congress from agriculture-heavy states won out.   Who Benefits Most From Farm Subsidies? According to the Cato Institute, the largest 15 percent of farm businesses receive  85 percent of the subsidies.   The Environmental Working Group, a database that  tracks $349 billion in farm subsidies paid between 1995 and 2016 backs these statistics up. While the general public may believe that the majority of subsidies go to helping small family operations,  the primary beneficiaries are instead the largest producers of commodities like corn, soybeans, wheat, cotton, and rice: Despite the rhetoric of preserving the family farm, the vast majority of farmers do not benefit from federal farm subsidy programs and most of the subsidies go to the largest and most financially secure farm operations. Small commodity farmers qualify for a mere pittance, while producers of meat, fruits, and vegetables are almost completely left out of the subsidy game. From 1995 through 2016, reports the Environmental  Working Group, seven states received the lions share  of subsidies, nearly 45 percent of all benefits paid to farmers. Those states and their respective shares of total U.S. farm subsidies were: Texas - 9.6%Iowa - 8.4%Illinois - 6.9%Minnesota - 5.8%Nebraska - 5.7%Kansas - 5.5%North Dakota - 5.3% Arguments for Ending Farm Subsidies Representatives on both sides of the aisle, in particular, those concerned with growing  federal budget deficits, decry these subsidies as nothing more than corporate giveaways. Even though the 2014 farm bill limits the amount paid to a person who is actively engaged in farming to $125,000, in  reality, reports the Environmental Working Group, Large and complex farm organizations have consistently found ways to avoid these limits. Furthermore, many political pundits believe that subsidies actually harm both farmers and consumers. Says Chris Edwards, writing for the blog Downsizing the Federal Government: Subsidies inflate land prices in rural America. And the flow of subsidies from Washington hinders farmers from innovating, cutting costs, diversifying their land use, and taking the actions needed to prosper in a competitive global economy.   Even the historically liberal New York Times has called the system a joke and a slush fund.  Although writer Mark Bittman advocates for reforming the subsidies, not ending them, his scathing assessment of the system in 2011 still stings today:   That the current system is a joke is barely arguable: wealthy growers are paid even in good years, and may receive drought aid when there’s no drought. It’s become so bizarre that some homeowners lucky enough to have bought land that once grew rice now have subsidized lawns. Fortunes have been paid to Fortune 500 companies and even gentlemen farmers like David Rockefeller. Thus even House Speaker Boehner calls the bill a slush fund.