TIME VALUE OF MONEY Company Receive Point of View: The money which hold by the company today has more value then the money which will be receive in the future. Company Payment Point of View: The money which is paid by the company today has less value than the money which is paid in the future. Future Value: The value of present amount or Series of cash calculated at some interest rate for future time is called future value. Present Value: The value of future amount or series of cash Calculated at some interest rate for present time is called present value. Interest: The cost of used of borrow funds. there are two types of interest Simple interest Compound interest Example: Suppose Amount 100000 interest rate 10% year 3 calculation of simple or compound Simple interest: 1. 100000 * 10%=10000 2. 100000* 10%=10000 3. 100000* 10%=10000 Compound interset: 1. 100000* 10%=10000 2. 110000* 10%=11000 ...
MBA NOTES:MASTER IN BUSINESS ADMINISTRATION (MBA) OR BUSINESS NOTES