115.020.10.60 Reading 6 - Time Value of Money - 6. The Cash Flow Additivity Principle
6. The Cash Flow Additivity Principle
f. demonstrate the use of a time line in modeling and solving time value of money problems.
What is the additivity principle?
Dollar amounts indexed at the same point in time are additive. Basically, you can take two series of payments and either add up their individual calculated FV or combine the payments and calculate the combined FV.