公司理财(双语)time value.pptVIP

Time value of money A dollar today is worth more than a dollar tomorrow. The dollar today can be invested to start earning interest immediately Simple and Compound interest Simple interest Interest is not reinvested, is earned each period only on the original principal. Suppose you invest $1000 for one year at 5% per year. What is the future value in one year? Interest = 1000(.05) = 50 Value in one year = principal + interest = 1000 + 50 = 1050 Future Value (FV) = 1000(1 + .05) = 1050 Suppose you leave the money in for another year. How much will you have two years from now? FV = 1000(1