Finance - FV=PV(1 r)^t Cash flow at time 1=10,000 r=.07 t=1...

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Finance Present value of a certain amount of money is lower than future value. When receiving money we want to receive as quickly as possible. When paying for money we want to pay as late as possible. When we are talking about the concept of value we are talking about the price of something today. Future value formula
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Unformatted text preview: FV=PV(1+r)^t Cash flow at time 1=10,000 r=.07 t=1 PV=FV 1/(1+r)^t term called discounting Discount factor must be less than one since present value must be lower than the future value. So the amount multiplied by the future value must lower inorder for it to work. If r=0...
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