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Mullins
Business
9 August, 09:59
3 key concepts of investments
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Aden Lin
9 August, 10:03
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Time Value of the Money : This means that the future value of money is lesser than the present value of the money.
Compounding effect: this means that once an interest is accumulated on the principal, then the interest earned for the next period earns the additional interest income on the initial principal and the interest. Over time, this effect can increase wealth tremendously.
Discounting : discounting refers to a selected rate, (that represents the inflation and the cost of capital) used to reduce and adjust the value of future sum or a cash flow to the present value.
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