Management and Organizational Studies 2310A/B Lecture Notes - Lecture 8: Sign Convention, Texas Instruments, Investment

• School: Western University
• Department: Management and Organizational Studies
• Course: Management and Organizational Studies 2310A/B
• Professor: Jun Wang

Document Summary

Chapter 5 the time value of money. Money now is worth more than money later! Why: dollar received today can be invested to earn interest, the amount of interest earned depends on the rate of return that can be earned on the investment. Time value of money quantifies the value of a dollar through time. Present value earlier money on a time line. Future value later money on a time line. Interest rate exchange rate between earlier money and later money: discount rate, cost of capital, opportunity cost of capital, required return. If you were to invest ,000 at 5% interest for one year, your investment would grow to ,500. would be interest (,000 . 05) ,000 is the principal repayment (,000 1) It can be calculated as: ,500 = ,000 (1. 05) The total amount due at the end of the investment is called the.