Time Value of Money

Abstract

This is a course material from the book Investment Decision Making. For Firm and Project Valuation. The book is originally in Spanish and is untitled as Decisiones de inversión. Para la valoración financiera de proyectos y empresas.

In this second chapter we deal with the Basic concept in Finance: the time value of Money. A dollar today is worth more than a dollar tomorrow. This concept allows us to find equivalent amounts of Money in different period of time. This will enable us to compare different cash flow profiles. In the last part f the chapter we study the different structures of a debt schedule. We use intensively the spreadsheet.

Note: Downloadable document is in Spanish.

Keywords: Time value of money, interest, discount process, annuities, real interest rate, discount rate, debt schedule

JEL Classification: G31