Ch 5- The Time value of Money 2 ◎2002, Prentice Hall. Inc
Ch. 5 - The Time Value of Money © 2002, Prentice Hall, Inc
The Time value ofmoney Compounding and Discounting Single Sums (
The Time Value of Money Compounding and Discounting Single Sums
We know that receiving SI today is worth more than Sl in the future. This is due to opportunity costs The opportunity cost of receiving SI in he future is the interest we could have earned if we had received the si sooner Today Future HE UNE AMERICA THE UNITED STATES OF AMERICA ONE DOLLAR ONE DOLLAR
We know that receiving $1 today is worth more than $1 in the future. This is due to opportunity costs. The opportunity cost of receiving $1 in the future is the interest we could have earned if we had received the $1 sooner. Today Future
If we can measure this opportunity cost, we can
If we can measure this opportunity cost, we can:
If we can measure this opportunity cost, we can Translate SI today into its equivalent in the future (compounding
If we can measure this opportunity cost, we can: • Translate $1 today into its equivalent in the future (compounding)