General Concepts 3 min read
Opportunity Cost
What Is Opportunity Cost? Opportunity costs represent the benefits an individual, investor or business misses out on when choosing one alternative over…
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General Concepts 3 min read
Time Value of Money (TVM)
What Is the Time Value of Money (TVM)? The time value of money (TVM) is the concept that money you have now…
General Concepts 3 min read
The Meaning of Equivalence
In order to evaluate investment alternatives, sums of money produced at different points in time must be compared. This is…
General Concepts 2 min read
Factor Formulas
The table below summarizes the equivalency factors . The Name column shows the traditional names for the factors. Each factor has a…
General Concepts 3 min read
Equivalent annual cost
In finance, the equivalent annual cost (EAC) is the cost per year of owning and operating an asset over its entire lifespan.…
General Concepts 1 min read
cost dominated cash flow diagram
Cash Flow Cash flow is the sum of money recorded as receipts or disbursements in a project’s financial records. A…
General Concepts 2 min read
WORKEDOUT PROBLEMS
Single-Payment Compound Amount A person deposits a sum of Rs. 20,000 at the interest rate of 18% compounded annually for…
General Concepts 3 min read
Annual equivalent method
In most of the practical decision environments, executives will be forced to select the best alternative from a set of…
General Concepts 3 min read
FUTURE WORTH METHOD
· In this method, the future worth of various alternatives will be computed. Then, the alternative with the maximum future worth…
General Concepts 3 min read
Effective Interest Rates
Nominal, Period and Effective Interest Rates Based on Discrete Compounding of Interest · Usually, financial agencies report the interest rate on…
