Slide 1: Real and Nominal Rates of Interest & Net Present Value
Real versus Nominal Rates of Interest
Though cash flow from bonds is certain, however, due to inflation, the
Definition of Finance
A discipline concerned with determining value (what something is worth today)
and making decisions based on that value assessment.
The finance fun
A rate applicable to a financial transaction that will take place in the future
Often used as a lock in rate for investment projects for following year
What is Cash Flow?
It means the difference between the number of dollars that came in and the
number that went out
Typically found in the Statement of Cash Flows
Definition of Present vs Future Value
Most basic principle of finance: a dollar today is worth more than a dollar
o Capitalisation: What is the future value