Introduction to the Time Value of Money
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Hi Kanjoh,
I thought the discount rate takes a future figure and discounts it to its present value?
EG. An investment pays you 1 200 000 in a years time, but for that you need to invest 1 000 000 at a rate of 10%.. Is the investment worth the money?
1 200 000 / 1.1 = 1 090 909. So this means that YES the investment is worthwhile because you receive more investment capital than from your original investment
Hope I have it right as I have an exam tomorrow. Thanks :)
JoshWhyatt5 1 year ago