Reading 6 The Time Value of Money (Layout)
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The reading is organized as follows:
Section 2 introduces some terminology used throughout the reading and supplies some economic intuition for the variables we will discuss.
Section 3 tackles the problem of determining the worth at a future point in time of an amount invested today.
Section 4 addresses the future worth of a series of cash flows. These two sections provide the tools for calculating the equivalent value at a future date of a single cash flow or series of cash flows.
Sections 5 and 6 discuss the equivalent value today of a single future cash flow and a series of future cash flows, respectively.
In Section 7, we explore how to determine other quantities of interest in time value of money problems.