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6 Cards in this Set
- Front
- Back
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Mathematical equivalence |
resulting from algebraic formulation |
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decisional equivalence |
resulting from a lack of importance of the calculation results to the decision maker |
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market equivalence |
arising when one cash flow scheme can be replaced by another at zero cost |
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The basis of market equivalence |
there is a way of exchanging future cash flow for present cash flow |
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Assumptions |
1. assume market equivalence holds 2. assume decisional equivalence is based purely on financial grounds |
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conclusions |
now have a basis for comparing costs of projects when there are choices about when and how to make payments |
