Contents
• Introduction to the concept of “inflation” – Wholesale Price Index and Consumer Price Index
• Money losing value due to reduction in purchasing power
• Concept of interest as compensation in purchasing power of money
• Four tier structure for rates of interest in any economy
• Compounding and discounting processes
• Application of time value of money to business decisions
• Numerical exercises for practice
At the end of the chapter the student will be able to
• Determine - Future value of a present sum by compounding
• Determine - Present value of a future sum by discounting
• Determine - Present value of a bond investment
• Explain - the different tiers of interest structure in an economy
• Choose – the best project based on its “Net Present Value”
Download Full Notes
• Introduction to the concept of “inflation” – Wholesale Price Index and Consumer Price Index
• Money losing value due to reduction in purchasing power
• Concept of interest as compensation in purchasing power of money
• Four tier structure for rates of interest in any economy
• Compounding and discounting processes
• Application of time value of money to business decisions
• Numerical exercises for practice
At the end of the chapter the student will be able to
• Determine - Future value of a present sum by compounding
• Determine - Present value of a future sum by discounting
• Determine - Present value of a bond investment
• Explain - the different tiers of interest structure in an economy
• Choose – the best project based on its “Net Present Value”
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