Capital Invested - Update Capitalization and Equivalence
Capital Invested - Update Capitalization and Equivalence

Summary/Abstract: A simple calculation shows that a Romanian leu received today is worth more than the one received after one year because there is an opportunity to invest profitably today this leu that we expect in the future. Similarly, to spend a penny more than a year is preferable its immediate spending because it can bring meantime gain. This simple reasoning proves that the time value of money is related to both the temporal scope of cash flows and the individuals or companies the opportunity to gain a return of capital placed.

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