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Business Finance- time value of money
Has worth independent of any benefit it may provide to humans
Time value of money
the principle that a dollar received today is worth more than a dollar received in the future
What an amount invested today at a particular interest rate will be worth in the future
interest paid on the principal alone , I=prt
interest earned on both the principal amount and any interest already earned
The act of finding the present value of future cash flows.
the rate used to calculate the present value of future cash flows
Discount rate formula
FV = PV x 1/(1+i)
a negative value
a positive value
Approximation of how long it will take to double a sum at a given interest rate. (72/annual compound interest rate)
Time needed to double your money
See rule 72