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Fundamentals of Cost Accounting 3rd Edition by William N. Lanen, Shannon W. Anderson, Michael Maher
Edition 3ISBN: 0073527114Fundamentals of Cost Accounting 3rd Edition by William N. Lanen, Shannon W. Anderson, Michael Maher
Edition 3ISBN: 0073527114What does the time value of money mean?
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Step 1 of 3
Capital budgeting
Capital budgeting is the process used by the company to evaluate the capital investment that are available. The company uses various capital budgeting methods to evaluate whether the company should invest in the particular project that is whether the project is profitable for the company.
Step 2 of 3
Present value
Present value is the value of money today which would be received in future. The future amount is discounted using a discount rate to calculate the present value of the amount today.
Step 3 of 3
Time value of money mean that the value of money is worth different in future then today this is due to the fact that interest is earned on investment and so the amount invested today would differ than amount received in future.
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