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  • January 2005
  • Tutorial

Buying Time

By: Robert S. Kaplan
  • Format:Multimedia
  • | Pages:1
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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

Cash Flow; Value; Interest Rates; Financial Statements

Citation

"Buying Time." Harvard Business School Tutorial 104-708, January 2005.
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About The Author

Robert S. Kaplan

Accounting and Management
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  • We Need Better Carbon Accounting. Here's How to Get There. By: Robert S. Kaplan and Karthik Ramanna
  • A Career Life-Cycle Perspective on Women's Health and Safety By: Robert S. Kaplan, Chizoba L. Chukwura, Gregory H. Gorman, Vivian S. Lee, Chester B. Good, Kathleen L. Martin, Gregory A. Ator and Michael D. Parkinson
  • Sustainable Strategies and Net-Zero Goals By: Mark L. Frigo, Robert S. Kaplan and Karthik Ramanna
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