Logical and Mathematical Concept of the Time Value of Money and Discounting

DOI

10.2991/essd-19.2019.98How to use a DOI?

Keywords

investment project, the time value of money, uncertainty, risk, methods of assessing the effectiveness of investment projects

Abstract

In the conditions of non-stationary economy during the investment analysis there is a need to take into account the factors of changes in the value of money in time, uncertainty and risk. This requires a comprehensive and systematic analysis based on the logical and mathematical concept of the time value of money and discounting in the formation of the evaluation apparatus of investment projects. The authors propose the principle of logical-mathematical concept, which consists in the fact that you can only discount the increased amount, not capital gains. It is argued that it is mathematically incorrect to compensate for the impact of inflation, risk and alternative cost of capital on the cash flows of a real investment project by discounting cash inflows. The principal point in assessing the effectiveness of investment projects is the organization of a clear algorithm of cash flows. The authors have compiled such an algorithm.

Copyright

© 2019, the Authors. Published by Atlantis Press.

Open Access

This is an open access article distributed under the CC BY-NC license (http://creativecommons.org/licenses/by-nc/4.0/).

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TY  - CONF
AU  - N.О. Shevkunov
AU  - А.V. Zhigunova
AU  - I.P. Ovsyannikova
AU  - I.V. Logvinova
PY  - 2019/07
DA  - 2019/07
TI  - Logical and Mathematical Concept of the Time Value of Money and Discounting
BT  - Proceedings of the 2nd International Conference on Education Science and Social Development (ESSD 2019)
PB  - Atlantis Press
SP  - 442
EP  - 445
SN  - 2352-5398
UR  - https://doi.org/10.2991/essd-19.2019.98
DO  - 10.2991/essd-19.2019.98
ID  - Shevkunov2019/07
ER  -