Chapter 3 Time Value of Money
The Time Value of Money. 1.1 Why money has time value? 1.1.1 Money received today is worth more than the same sum received in the future, i.e. it has a time value. 1.1.2 This occurs for three reasons: (a) potential for earning interest (cost of finance) (b) impact of inflation (c) effect of risk. 1.2. Compounding. 1.2.1 EXAMPLE 1. An investment ... ................
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