Chapter 5. Interest: The Time Value of Money
One of the most fundamental concepts in business—and therefore, in business decisions—is that money has time value; its value changes over time. A specific amount of money right now almost always has a different value than having the same amount of money at some other time. This concept has been around since the earliest recorded human history and is commonly known as “interest.” Anyone making a business decision needs to understand interest and how it affects that decision. This chapter defines and explains interest and shows how to relate the value of money at one time to the value of money at other times using a series of mathematical formulas. Later chapters show how interest is addressed in a ...
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