F4E: Decisions: Week 2

          A famous man once said "Money is the sixth sense that can buy you the remaining five". 

         The best definition for finance can be said as follows: 'Finance is allocation of money for its most productive use'. The more we get used to the financial related terms the more we get the confidence in working with the finances. We feel more and more comfortable to discuss about these concepts with friends, family and community people. Let's talk Money. When dealing with money in a financially awaken manner we get more confidence on how to use it, how to spend it, how to invest it, how to reinvest it and how to manage it. It is needed by an individual as a core quality to be succesfull in his life.

          Every theory needs to be concretised with the practice. "An ounce of practice worth more than a tonn of theory". We can enhance basic problem solving skills relating to finance with these 3 simple steps:

1. Visualise the problem.

2. Represent the information available.

3. Apply the appropriate formula.

          Time value of Money, this determines how money is valued over time. Compounding is referred to future values whereas discounting refers to present values. Calculating the present value of future cash flow to determine it's worth today is called as the "Discounted Cash Flow" valuation.

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