Why is the time value of money so important in capital budgeting decisions?
The investment decisions of a firm are generally known as the capital budgeting, or capital expenditure decisions. The firm's investment decisions would generally include expansion, acquisition, modernisation and replacement of the long-term assets. Sale of a division or business (divestment) is also as an investment decision.
Importance of Time value of money
Time literally is money - the value of the money you have now is not the same as it will be in the future and vice versa. It ...
This discusses the concept of time value of money and its application in capital budgeting decisions in 316 words.