JMU
The Time Value of Money
An Introduction


Prof. David Bernstein
James Madison University

Computer Science Department
bernstdh@jmu.edu


Motivation
Interest
A Formalization
A Formalization (cont.)
A Modified Version of the Original Question
Calculating the Present Value
An Example
An Example (cont.)
An Example (cont.)

Discounting the Revenue Stream

An Example (cont.)

Discounting the Cost Stream

An Example (cont.)

An Alternative Approach - Discounting the Profit Stream

Annuities
Annuities (cont.)
Annuities (cont.)
Annuities (cont.)
Internal Rate of Return
Internal rate of Return (cont.)