DECISION & RISK ANALYSIS
In general, we define the present value function, P(t), as follows: P(t) = “present value” of $1 delivered at time t; that is, the value in dollars at time 0 that is equivalent to a payment. of $1 at time t. With a constant interest rate r, P(t) = e-rt . V. Present value of a cash flow stream ................
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