ABSTRACT
In Asia Pacific, the Chinese government is encouraging private investment in 28 new airports for $16 billion as part of its efforts to make the aviation industry globally more competitive. This chapter introduces the terminology and the concept of the time value of money and its application to decision-making in the aviation industry. It discusses the time value of money, future value of a single cash flow, simple interest, compounding interest, new value of a single cash flow, annuities, future value of annuities, perpetuities, growing perpetuity, amortization and amortization schedule. The future value of an investment is the amount to which a cash flow or series of cash flows will grow over a given period of time when compounded at a given interest rate. Amortization is the payment of a loan where the payments contribute toward both interest and principal over the life of the loan and is applicable to any annuity or loan that is comprised of fixed payments.
