Mind map
Time value of money
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Time value of money
- Refers to the fact that money on hand today is generally worth more than the same amount money given tomorrow
Future Value and Compounding
- Future Value refers to the amount of money an investment will grow to after a certain period of time at a given Interest Rate
- Compounding
- Compounding refers to the process of accumulating interest on the interest of a principle; i.e. accumulating interest on an investment to get more interest over time
- Types of Interest
- Simple Interest
- Compound Interest
- Future Value= PV(1+r)^t
Present Value and Discounting
- Present Value
- The current value of future cash flows discounted at an appropriate rate
- Discounted Cash Flow Valuation
- Calculating the present value of a future cash flow to determine its value today
- Discount Rate
- Present Value
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- Description
- Corporate Finance Mind Map on Time value of money, created by tush991 on 18/05/2014.
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- tush991
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