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A General Model for Exponentially Compounding and Discounting Future Cash Flows

William W. Thompson, Jr.

Management Science · 1965 · Volume 12 · Issue 2

DOI: 10.1287/mnsc.12.2.c3

Abstract

This paper presents a general model to be used in adjusting cash flows which occur over future time intervals to reflect the effects of continuous compounding and/or discounting. The method is illustrated by means of a hypothetical example. The framework of analysis employed here may be extended to other systems having similar characteristics of growth and decay.

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