7. Time Value of Money and Evaluating Investments

  1. Daniel W. Halpin1 and
  2. Bolivar A. Senior2

Published Online: 25 AUG 2009

DOI: 10.1002/9780470548813.ch7

Financial Management and Accounting Fundamentals for Construction

Financial Management and Accounting Fundamentals for Construction

How to Cite

Halpin, D. W. and Senior, B. A. (2009) Time Value of Money and Evaluating Investments, in Financial Management and Accounting Fundamentals for Construction, John Wiley & Sons, Inc., Hoboken, NJ, USA. doi: 10.1002/9780470548813.ch7

Author Information

  1. 1

    Purdue University

  2. 2

    Colorado State University

Publication History

  1. Published Online: 25 AUG 2009
  2. Published Print: 2 SEP 2009

ISBN Information

Print ISBN: 9780470182710

Online ISBN: 9780470548813

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Keywords:

  • money;
  • interest;
  • MARR;
  • annuity;
  • investments

Summary

This chapter contains sections titled:

  • Introduction

  • Time Value of Money

  • Interest

  • Simple and Compound Interest

  • Nominal and Effective Rate

  • Equivalence and MARR

  • Discount Rate

  • Importance of Equivalence

  • Inflation

  • Sunk Costs

  • Cash Flow Diagrams

  • Annuities

  • Conditions for Annuity Calculations

  • Calculating the Future Value of a Series of Payments

  • Summary of Equivalence Formulas

  • Worth Analysis Techniques: An Overview

  • Present Worth Analysis

  • Investments with Different Life Spans

  • Equivalent Annual Worth (EAW)

  • Internal Rate of Return

  • Limitations of the IRR Method

  • An Example Involving Cost Recovery

  • Comparison Using EAW

  • An IRR Example—Owner Financing Using Bonds

  • Review Questions and Exercises