Q: Many business transactions involves making or recieving cash payment at various future dates. Discuss by given quantitative example?

Sure! Let's discuss a quantitative example of a business transaction that involves making or receiving cash payment at various future dates.

Let's imagine a scenario where Company A purchases goods from Company B on credit. Company A agrees to pay Company B $10,000 in 3 months' time.

To calculate the future value of this transaction, we need to consider the time value of money, which takes into account the fact that money today is worth more than the same amount of money in the future due to the potential to earn interest or return on investment.

To calculate the future value, we need to know the interest rate or discount rate. Let's assume the interest rate is 5% per annum in this example.

Using the compound interest formula, we can calculate the future value (FV) of $10,000 after 3 months:

FV = PV * (1 + r)^n

Where FV is the future value, PV is the present value, r is the interest rate per period, and n is the number of periods.

In this case:
PV = $10,000 (present value)
r = 5% / 12 (monthly interest rate)
n = 3 (number of months)

FV = $10,000 * (1 + 5%/12)^3

Calculating this, we find that the future value of $10,000 after 3 months at a 5% annual interest rate is approximately $10,126.

Therefore, in this business transaction, Company A will need to make a cash payment of $10,126 to Company B after 3 months to account for the time value of money.

I hope this helps! Let me know if you have any further questions.