Finance: Time Value of Money

When Jose received 200,000 pesos in full from a buyer of fruits. He was happy. Jose is the owner of an orchard and usually every year, he spent more than the amount of fruits he sold that varies from 30,000 pesos to 40,000 pesos. This is because of Climate Change, the change in temperature and weather determines the amount of fruits not to mention the calamities such as typhoon and earthquake, which is rampant in the Philippines.

Jose received 200,000 pesos for the fruits that will be harvested for each year within 5 years. This is his first time move and considering the cost of it today is different after 5 years. From the book Financial Management principles and applications, the amount of money today is worth more than a dollar received a year from now because for instance a peso today can be invested and earn interest. The economist calls an “opportunity cost” of passing up the earning potential of the peso today. The opportunity cost is the time value of money.

Compound Interest and future value is very important in realizing the significance of the value of peso today. Since Jose received 200,000 pesos today and that value on the other hand is not sure on the buyer who paid him in full because of Climate Change and the risk he took which could be favorable or not, the luck is with Jose and the opportunity cost if he will use it well will be resulting to an earnings. Say, Jose invested that money in full in a sure business, he could earn more, that is the opportunity we are talking about.

If that 200,000 pesos earns 10% every year, the compound interest will be 20,000 pesos and for the next year will be 22,000 pesos because we add the principal and the interest for the first year which became the principal on the second year or present value, and the interest we earned the first year, in effect we are now earning interest on interest, this is the concept of compound interest.

This is a discussion I have with my mother today, the “Time Value of Money” which is the money is more important today than in the future because of the “opportunity cost” and the value. This is to understand the best options if there are choices and decisions to make in terms of getting the money right now in full or wait for it every month. From this computation, I will stick to the full amount received today than a staggered payment that in five years, the risk is still there.

To make decisions, financial managers must compare the costs and benefits of alternatives that do not occur during the same period. Whether to make the profitable investments or to take advantage of favorable interest rates, financial decision-making requires an understanding of the time value of money. Managers who use the time value of money in all their financial calculations assure themselves of more logical decisions.

First Contest: Blogging for Advocacy

For Advocacy, Political, Lifestyle and Empowered Blogger. My Blog is featured every week at the CALABARZON area newspaper “Kliping Times”. Topics are about Advocacy, Politics, Lifestyle and Empowerment. For this Christmas season, I am planning to feature 5 Blogs before the end of this year. For your opinion, news and advocacy to be heard and printed, I am opening slots and opportunities for you.

I will accept articles the whole month of November that will be published and printed every week up to the end of 2011. One article per person will be published but you could send up to 5 articles to choose from.

Planning to give also additional prize for the Blogger who will be chosen, ok, still thinking about what kind of prize, so stay tuned!

Send your articles to gracenicolas@yahoo.com

Thanks.

Again, but what is Filipino?

In view with the recent attacks or crimes everywhere, I started to question again the mindset of our Filipino brothers and sisters. People are fighting because of misunderstanding. But in war, there are no winners but only casualties, children without parents or parents without children. Brothers are fighting with brothers or sisters are cursing one another. But why? Any reason for this? But what is Filipino?.

Filipinos are people from the Philippines. More than 92 Million Filipinos are living in the Philippines while 11 Million are living or working outside the country. Crimes are everywhere, whether Muslims killed Christians, Christians killed Muslims, Muslims to Muslims or Christians to Christians, It is not about Religion anymore, it’s about the character of a person and attitude towards morality, but what is morality? From the dictionary, Morality is the differentiation among intentions, decisions, and actions between those that are good (or right) and bad (or wrong). A moral code is a system of morality (for example, according to a particular philosophy, religion, culture, etc.) and a moral is any one practice or teaching within a moral code. The adjective moral is synonymous with "good" or "right." Immorality is the active opposition to morality (i.e. good or right), while amorality is variously defined as an unawareness of, indifference toward, or disbelief in any set of moral standards or principles.

But who and what is the basis of morality if people in one country have different points of view, set of standards or religion? What if the good to some religion are bad to some? Some even said that they are the only ones who will be saved in times of Armageddon. This is confusing, but our government is made of standards from diferent morality, the government is composed of different people with different moralities, they set the law and made it as the “Constitution”. In this case, everyone elected somebody who will lead us to what morality really means, here comes the President, the Senators and Congressmen. Let’s pretend that nobody disagree.

A great Filipino is one who has had the intellect and the courage to put more sense where the theologians and the politicians in cahoots together have put only nonsense making for our sick society. In the 500 years of Christianity in the Philippines , only one rare Filipino had the courage and the intellect to stand up against great odds to be a great Filipino - Jose Rizal - a truth-seeker, a scientist, and a humanist. To keep the Filipino frightened of the truth, however, Rizal was publicly executed by those in church authority - the ecclesiastical liars gifted with a free will from divinity to promote in the Philippines social insanity.---Poch Suzara.

Thanks to Carlos Celdrans’ ceiling and mirror for this “But what is Filipino” and if you haven’t been to his 1930’s “The Living Room” apartment, you might never know what I am talking about here. Carlos is an artist, tour guide, Reproductive Health advocate and the one after Rizal and Ninoy and might face a 6 years inprisonment if found guilty of violating “Offending the religious feelings” and why Ninoy? " The Filipino is worth dying for" but then killed by fellow Filipinos? well some said it was CIA's, hearsay or not, I believe that using intellect, there must be love too. Rizal, Ninoy and Carlos for the country, not for their own benefits but for others. Ridiculed by fellow Filipinos or Pinoys for making a difference, to stand alone as long as for the righteousness and for the majority.

To ridicule is easy especially if the topic is religion, but what is religion? Sometimes, one forget that they are not attacking the religion but the individual alone. As I will repeat over and over again. It's not about religion, race or gender. It’s about the character of the individual, its who you are, Atheist or Theist, both have flaws, both have points but united as one we could reach the highest impossible goal. You think it would be much better if both are fighting for a common cause? Which is for the betterment of the next generation. Stop typing and start acting, stop the fighting and start to do something because in this lifetime, theres gonna be no UTOPIA.