Page 333 - F2 - MA Integrated Workbook STUDENT 2018-19

Capital budgeting

Time value of money

2.1 Simple interest

Simple interest is calculated based on the original sum invested. Any interest earned
in earlier periods is not included:

V = X + (X × r × n)

V – future value

X – initial investment (present value)

r – interest rate (expressed as a decimal)

n – number of time periods

325