Value Of Value For Money - 2360 Words

INTRODUCTION Value for Money is the utility derived from every purchase or every sum of money which is spent. It is not only based on minimum purchase price but together with efficiency and effectiveness of purchase. The concept of value for money includes both qualitative and quantitative aspects. In addition, it typically involves an element of judgment on the part of a government. There is no precise indicator to measure value for money. Value for money can broadly be defined as what a government judges to be an optimal combination of quantity, quality, features and price (i.e. cost), expected (sometimes, but not always, calculated) over the whole of the project’s lifetime. There are 3 elements for Value for Money: †¢ Economy in the use of resources so as to maximize inputs per dollar, euro, pound, yen, etc. †¢ Efficiency to maximize outputs per input. †¢ Effectiveness to maximize outcomes per output. Qualitative VFM analysis typically involves sense-checking the rationale for using PPP—that is, asking whether a proposed project is of a type likely to be suitable for private financing. This often takes place at a relatively early stage of PPP development. Quantitative VFM analysis involves comparing the value for money of a proposed PPP (or actual bids received) with a â€Å"Public Sector Comparator† (PSC)—that is, a model of the project if implemented through traditional public procurement. TIMING AND ROLE OF VFM ANALYSIS VFM analysis is used to carry out all publicShow MoreRelatedTime Value of Money and Present Value1154 Words   |  5 Pagescollege 15 years from today and the other will begin 17 years from today. You estimate your children’s college expenses to be $23,000 per year per child, payable at the beginning of each school year. The annual interest rate is 5.5 percent. How much money must you deposit in account each year to fund your children’s education? Your deposits begin one year from today. You will make your last deposit when your oldest child enters college. Assume four years of college Solution: Cost of 1 year atRead MoreTime Value of Money1028 Words   |  5 Pagestoward understanding the relationship between the value of dollars today and that of dollars in the future is by looking at how funds invested will grow over time. This understanding will allow one to answer such questions as; how much should be invested today to produce a specified future sum of money? Time Value of Money In most cases, borrowing money is not free, unless it is a fiver for lunch from a friend. Interest is the cost of borrowing money. An interest rate is the cost stated as a percentRead MoreInflation And The Value Of Money1710 Words   |  7 Pagesannual percentage increase. When there is an inflation, the same amount of money buys a smaller percentage of a good or service compared to previous years. This means the value of money drops when inflation occurs. In economics, the value of money is viewed in terms of purchasing power, which is the real, tangible goods that can be bought by money. When inflation goes up, there is a decline in the purchasing power of money. For example, if the inflation rate is 3%, then theoretically a 1 £ bottle ofRead MoreThe Value Of The Fiat Money1058 Words   |  5 Pages1) People can lose faith in money because if the value becomes questionable, so will the acceptance of it. Economists believe that the better the fiat money serves as a store of val ue, the more acceptable it is. This statement basically means that since fiat money is not backed by anything of value, its not as easily accepted. Over time, people gradually come to accept the fiat money because they believe others will accept it also. 2) When the value of money was based on its gold content, newRead MoreNotes On Value Of Money1031 Words   |  5 PagesIn this chapter 4, Time Value of Money we discussed about Future Value, Present Value, Rates of return and Amortization. Future value is the value of an asset at a particular date that means a given sum of money is â€Å"worth† at a specified time in the future with certain interest. It is product of present value and accumulation function. Present value also known as Present Discounted value. It is less or equal to the future value because of money has interest rate. For example â€Å"A dollar today is worthRead MoreTime Value of Money1033 Words   |  5 PagesTime Value of Money (TVM), developed by Leonardo Fibonacci in 1202, is an important concept in financial management. It can be used to compare investment alternatives and to solve problems involving loans, mortgages, leases, savings, and annuities. TVM is based on the concept that a dollar today is worth more than a dollar in the future. That is mainly because money held today can be invested and earn interest. A key concept of TVM is that a single sum of money or a series of equal,Read MoreTime Value of Money967 Words   |  4 PagesTime Value of Money The time value of money relates to many activities and decision in the financial world. â€Å"Understanding the effective rate on a business loan, the mortgage payment in a real estate transaction, or the true return on an investment depends on understanding the time value of money† (Block, Hirt, 2005). The concept of time value of money helps determine how financial assets are valued and how investors establish the rates of return they demand. Many different types of companiesRead MoreThe Time Value of Money875 Words   |  4 Pagestime value of money, and illustrate that I understand the concept. First, there will be an explanation of the key concepts of time value of money, including why it is important to know what these concepts are and how they are applied to the real world. The report will also contain several calculations made using present and future value tables. The calculations illustrate that not only do I understand the concepts but that I can apply them to mathematical computations. 1. The time value of moneyRead MoreEssay On Value Of Money1201 Words   |  5 Pagesof exchange. How many roosters is a bull well worth? What is a reasonable value of a plough in poultry eggs? These responses are subjective, makings trade hard to forecast. Loan tackled the function of a global ways of payment. Originally, the money was backed by some form of security, however all money in todays globe is symbolic and also based upon depend on. And wherever trust fund is involved, it can be shed. For money to be considered legal tender, it has to fulfill certain criteria, a lotRead MoreTime Value Of Money754 Words   |  3 PagesTime Value of Money The time value of money indicates the relationship between time and money because of the opportunity to invest todays dollar and receive interest on the investment in the future. A dollar received today is worth more than a dollar promised sometime in the future. Interest is the payment for the use of the money lent or borrowed (principal). Interest is figured on a rate basis. Any amount of money invested is worth more the sooner it is received (Time Value of Money - TVM, 2013)