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Time Value of money , FV = c0 x (1 + r ) n, FV = C0 x ( 1 + r ), TVM -…
Time Value of money
Cash flows
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A conventional cash flow
typically structured as initial structured as initial outlay or outflow, followed by a number of inflows over a period of time
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Cash-flows = annunity
a series of equal payments or receipts that occur at evenly spaced intervals e.g rental payments, monthly home mortgage payments
an annuity can occur at the end of each period, or at the beginning of each period
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Annuity due
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e,g, leasing arrangements
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Money has time value because the value of money received today is worth more than the same amount received in the future
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The term (1+r) is the future value interest factor, also called
future value factor