A Simple Comparison of Two Proposals
The last two chapters showed how interest over time affects the value of money. This means that a cash-flow instance at one point in time doesn't have the same value as an equal-amount cash-flow instance at some other point in time. Because it's hard to compare individual cash-flow instances, it is even harder to compare cash-flow streams. It's not a simple job to compare different cash-flow streams and figure out whether they are equal or not. Or, more importantly, if they aren't equal, then which is better?
Imagine that Mountain Software receives an offer from one of its customers. That customer offers to buy one of Mountain Software's products at the full price of $7500 today. The customer also offers instead ...
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