Time Value of Money (TVM) is the concept that the money available now is worth more than the same amount in the future, given their earning power over time. Concerning the equivalence relationships between cash flows occurring on different dates, the amount of difference between two cash flows is called interest. For example, if you …
Dividends are portions of a company’s earnings that it distributes amongst its shareholders. One might reasonably think why a company would readily give money to other people, and the answer to that is that is giving out dividends contains benefits for the company itself. Whenever a company makes a profit, it can either re-invest in …
To put it simply, Compound Interest is the interest you earn on interest. It is the result of reinvesting interest so that interest in the next period is then earned on the principal sum plus previously accumulated interest. Below is the formula to calculate compound interest: Compound interest is calculated by multiplying the principal amount …
