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    Money-Time Relationship and Equivalence

    Uploaded by

    Christian Leones

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd

    Money-Time Relationship and Equivalence

    Uploaded by

    Christian Leones
    11 views13 pages

    Original Title

    Money-time Relationship and Equivalence

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    © © All Rights Reserved

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    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    11 views13 pages

    Money-Time Relationship and Equivalence

    Uploaded by

    Christian Leones

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    of 13

    4.

    1 Return to Capital
    4.2 Debt Capital
    4.3 Concept Of Interest
    4.4 Simple and Compound Interest
    4.5 Concept of Equivalence
    EXAMPLES
    C=P[(1+ -1]
    Where:

    C = Compound interest
    P = Principal
    r = rate per period
    n = number of periods
    Solve the following: Simple and Compound Interest

    3. John invests Php 5,500 compounded yearly in a


    bank that pays compound interest at the rate of
    4 % per year. Find the amount that john has in
    the bank after 7 years?
    CONCEPT OF EQUIVALENCE
     Economic equivalence is established when there is indifference
    between a future payment, or a series of future payments, and
    a present sum of money.

     It includes the comparison of alternative options, or proposals,


    by
    reducing them to an equivalent basis, depending on:
     interest rate
     amounts of money involved
     timing of the affected monetary receipts and/or
    expenditures
     manner in which the interest, or profit on invested capital is

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