cost benefit analysis

=> benefits>costs

- qualifying costs and benefits (how to compare stocks at different times, currencies or risks)

- steps

find costs by looking at market price and quantity
find benefit

net value of the project: benefits-costs

--> positive: competitive markets (condition when goods are bought and sold at the same price, price determines value of the good-personal opinion on "fair price" is irrelevant)

why ppl buy and sell stocks? (not a competitive market, ppl have different views on the market value of certain stocks)

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demand for loan of big bank surges, enn receives a surge in deposit

interest rate of big bank increase, those of enn decrease

how valuable? (benefits-costs)

28500-25000=3500

own opinions about future prospects do not alter value of present decision

	Created by Taylor Ngai over 6 years ago

time value of money: introduction

fina 2303 chapter 3