Chapter 3: Interest and Equivalence

tl;dr money at different times should be valued at different ratios, based on interest rates that compound

              ↑ F=172,220
1965          |
--------------- 2013
↓ P=18

F = P(F|P,i,N), F|P mean F given P
F = 18(1+i)^48
solving for i, we get 21% annual ROR over 50 years, or Return on Revenue

Nominal is the stated interest rate, agnostic of compounding period (sometimes called APR)

Annuity starts not at payment period 0 but at 1.

Chapter 4: Equivalence of Repeated Cash Flows

For uniform series over time, to calculate future amount:

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For uniform series calculating its present value (considering compounding interest):

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Chapter 5: Present Worth Analysis

One way of comparing things is with present worth analysis

Chapter 8: Risk

Average, Sqr, Varp, Stdevp, Frequency, Count, Ln

Three risk characteristics of financial assets

Ex-ante is the expected return of an investment

Ex-post is a measure of past performance

Chapter 6: Choosing a discount rate

We used net present value and internal rate of return

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Chapter 15: Minimum Attractive Rate of Return (MARR)

Assumed interested rate was given so far, but in practice we compute different rates or MARR