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The Essentials of Financial Analysis by Samuel Weaver

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CHAPTER SEVENTHE TIME VALUE OF MONEY

The time value of money (TVM) is one of the most fundamental concepts in business and an analytical cornerstone. TVM spans the disciplines of finance, accounting, and economics. The concept is found in the financial analysis of any multiperiod decision. Business decisions such as research and development investment, investment in new products, capital expenditures, lease versus borrow, build versus buy, bond refunding, security valuation, acquisition valuation, financial structure decisions, and the whole concept of the cost of capital are subjects that cannot be understood without knowledge of the TVM, compound interest, and discounted cash flows. The analysis of all multiyear business decisions with any ...

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