In evaluating capital investment projects, current outlays must be judged against the current value of future benefits.

An annuity may best be defined as

A dollar today is worth more than a dollar to be received in the future because

Compounding refers to the growth process that turns $1 today into a greater value several periods in the future.

Higher interest rates reduce the present value amount.

The largest source of short-term funds for most companies is suppliers (trade credit).

Accounts receivable may be used as a source of financing by

"Stretching the payment period" refers to the practice of trying to take a trade discount after the discount period.

Compensating balances are important for banks because their existence allows them to make loans at lower quoted rates.

Small companies finance a relatively greater proportion of their assets through trade credit than do larger firms.