Finance (Basic)
Ludek Benada
Department of Finance
Office 533
75970@mail.muni.cz

Time Value of Money
Why is a dollar tomorrow less worth than a dollar today?
n Opportunity costs
n Purchasing power of money

Future Value
Is a value of an asset in a specific day in the future.


Present Value
PV = df x CF


Discount Factor
DF is the value today of $1 received in the future.


Net Present Value
NPV = PV – PV of Required investment


Cumulative Net Present Value



Present Value of Perpetuity



Risk and Present Value
A safe dollar is worth more than a risky one.


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