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Week 2, Formulas - Coggle Diagram
Week 2
Time value of Money
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Utility of Money
The sooner we get paid, the more satisfied we are as we can chose to invest that capital.
3 Rules
- Money can only be combined and compared if earned at the same time period
- Calculating a future value given periodic growth of an investment is called compounding. Often used to work out what capital accumulates to in the future given re investment of a periodic return.
- Calculating a present value by diminishing money earned in the future to reflect the time value of money is called discounting.
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