Chapter Summaries
5.1 Construct cash flow timelines to organize your analysis of problems involving the time value of money. (pgs. 130–131)
Summary:
Timelines can help you visualize and then solve time-value-of-money problems. Time periods—with 0 representing today, 1 the end of Period 1, and so forth—are listed above the timeline. Note that Period 1 represents the end of Period 1 and the beginning of Period 2. The periods can consist of years, months, days, or any unit of time. However, in general, when people analyze cash flows, they are looking at yearly periods. The cash flows appear below the timeline. Cash inflows are labeled with positive signs. Cash outflows are labeled with negative signs.
Key Term
- Timeline, page 130
A linear representation ...
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