Abstract
Would you prefer to have $100 now or $100 a year from now? Even though the amounts are the same, most people would prefer to have $100 now because of the interest it can earn. Thus, whenever we talk of money we must state not only the amount, but also the time. This concept—that money today is worth more than the same amount of money in the future—is called the TIME VALUE OF MONEY. The PRESENT VALUE of an amount is its worth today, while the FUTURE VALUE is its worth at a later time. These topics are discussed here and in Chap. 2. Another reason that most people would prefer to have $100 now is that its purchasing power in the future may be less than at present due to inflation, which is discussed in Chap. 3.
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© 2007 Springer Science+Business Media, LLC
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(2007). Simple Interest. In: Lovelock, D., Mendel, M., Larry Wright, A. (eds) An Introduction to the Mathematics of Money. Springer, New York, NY. https://doi.org/10.1007/978-0-387-68111-5_1
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DOI: https://doi.org/10.1007/978-0-387-68111-5_1
Publisher Name: Springer, New York, NY
Print ISBN: 978-0-387-34432-4
Online ISBN: 978-0-387-68111-5
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