Abstract
Suppose I owe you n payments of S/n dollars---total owed is S if there were no time-discounting---spread evenly over an amount of time t, at interest rate r per unit time. For example, I might owe you $120 in three payments over the coming year: $40 three months from now, another $40 in six months, and another $40 in nine months. If I wanted to instead just pay you once, a full $120, when should I do so to be perfectly equivalent to the three spread-out payments, given the interest rate?
Index Terms
- Borrowing in the limit as our nerdiness goes to infinity
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