FINANCIAL SEMINAR 4,
KNOWLEDGE CLIPS
Clip 1 The billion dollar machine
Time value of money means that a dollar now is worth more than a dollar to be
received five years from now or 30 years from now or a billion years from now.
So when you're evaluating long-term projects, a process called capital
budgeting, you have to consider the time value of money. Therefore, what
would you say is a fair price for your billion dollar machine? Well let's say an
appropriate interest rate is 10%. However, does that work? Okay, 10%. Means
that if the interest rate is 10% then the appropriate price for this billion dollar
machines 10 dollars.
KNOWLEDGE CLIPS
Clip 1 The billion dollar machine
Time value of money means that a dollar now is worth more than a dollar to be
received five years from now or 30 years from now or a billion years from now.
So when you're evaluating long-term projects, a process called capital
budgeting, you have to consider the time value of money. Therefore, what
would you say is a fair price for your billion dollar machine? Well let's say an
appropriate interest rate is 10%. However, does that work? Okay, 10%. Means
that if the interest rate is 10% then the appropriate price for this billion dollar
machines 10 dollars.
