Page 37 - FM Integrated WorkBook STUDENT 2018-19
P. 37

Investment appraisal – Discounted cash flow techniques





                           The time value of money




                             Money received or paid today is worth more than the same sum
                             received or paid in the future, i.e. it has a time value.  This occurs for
                             three reasons:

                                  potential for earning interest/cost of finance

                                  impact of inflation

                                  effect of risk


                             Discounted cash flow (DCF) techniques take account of the time value
                             of money when appraising investments.























































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