Technical Concepts

  • J.C. Bradbury


A dollar today is worth less than a dollar promised in the future and, therefore, they should not be valued equivalently—a concept commonly referred to as “the time value of money.” Present value discounting is a method used to account for the diminished value of money that will be received in the future. Discounting reflects the funds required to purchase an asset today that will yield the future sum, using the going interest rate to discount the future value of the expected payout. For example, to value receiving $100 in one year, we look at how much it would cost to purchase a low-risk bond that would pay out $100 one year from now. If the interest rate was ten percent, the bond would sell for approximately $91; thus, the present value of $100 is $91. In this book, I use an interest rate of 4.5 percent, which was the approximate interest rate on a one-year Treasure Bill in 2007—the base year for all financial calculations in the book. The formula for present value is as follows:


Interest Rate Multiple Regression Analysis Observational Unit Marginal Revenue Product Batting Average 
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Copyright information

© Springer Science+Business Media, LLC 2011

Authors and Affiliations

  1. 1.Kennesaw State UniversityKennesawUSA

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