Publications
Publications
- January 2005
Buying Time
By: Robert S. Kaplan
Abstract
Managers must frequently make decisions involving trade-offs between cash flows to be paid or received at different points in time. Accountants, in turn, must describe transactions that involve the payment and/or receipt of cash far in the future. This interactive tutorial covers the key concepts relating to cash flows taking place in different time periods. Students learn: Why a dollar received or paid in the future is worth less than a dollar today; how to calculate how much less a future dollar is worth, based on an interest rate and how far in the future it is to be received or paid; how to translate a cash flow from any point in time into its present or future value at any other point in time; and how to use annuity tables and Excel functions to simplify some calculations as well as how to solve complex problems using these tools.
Keywords
Citation
"Buying Time." Harvard Business School Tutorial 104-708, January 2005.