What is the “opportunity cost”? How is this concept used in TVM analysis? Please explain.
What are the cash flow requirements, in terms of dollar amounts and intervals of time, which would make the Present value of the Annuity formula useful? In case there are uneven cash flow amounts, what would be the correct procedure to calculate the present value of all cash flows?
Banks and other lenders are required to disclose a rate called the APR. What is this rate? Why did the US Congress require that it be disclosed? Is it the same as the effective annual rate? Please explain.
TEXT BOOK: Brigham Fundamental of Financial Management: Concise Edition 10e CM
Chapter 5