Managerial Finance

Running head: MANAGERIAL FINANCE
Managerial finance
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1MANAGERIAL FINANCE
Table of Contents
Answer 4..........................................................................................................................................2
Answer 5..........................................................................................................................................3
Answer 6..........................................................................................................................................6
Reference.........................................................................................................................................8

2MANAGERIAL FINANCE
Answer 4
Time value of money
TVM is idea that the worth of the money that is available at present time as compared to
the worth of the money at future owing to the potential earning capacity. The core principle of
TVM holds that the provided money can earn the interest. One fundamental concept in finance is
that the money has time value that is attached to it. In simple way, it will be safe to state that the
dollar worth more today that the dollar that will be received at later period (Muda & Hasibuan,
2018). TVM concept is used by the company in following aspects –
 Long service provision – the entity uses discount rates for computing present value that is
determined through referring to the market yields on closing of the year based on 10
years high quality corporate bonds that have due dates similar to those of the liabilities
(Telstra.com.au, 2019).
 Value in use for the purpose of impairment – discount rate here represents pre-tax
discount that is applied to projection of cash flows. It reflects determined market and the,
discount rate that is risk adjusted for the specific risks associated with the cash generating
units and the nation under which it operates. Further, the rate of terminal value growth
represents rate of growth applicable for extrapolating cash flow beyond the forecast
period 5 year (Telstra.com.au, 2019). For instances the entity uses the following discount
rates –