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ISM101 Discussion, 10.21.04 Notes from the Field

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Game Theory

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Future Value: The value at a future date of dollar today

Future Value: The value at a future date of dollar today. Period 0 Period 1 Period 2 $1 $1*(1+r) {$1*(1+r)}*(1+r) $1*(1+r) 2 Rate of time preference : proportional increase in income required next period to compensate for the loss of $1 today :personal interest rate

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Capital Budgeting

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