Time Shifting

Time shifting is yet another way of using the common cash flow patterns for problems that don't quite fit the assumptions of those patterns. Primarily it deals with the delay or acceleration of costs and benefits. To find a value at different time periods, it is necessary to multiply a value (usually in factor notation) by:

(1+i)N

Where i is the interest rate and N is the number of time periods being shifted. N will be positive or negative depending on if you are moving forward or back in time. Another way to do this is to leave N as a positive exponent, and then multiply (1+i)N by a value if you want to move it forward in time, or divide it by the value if you want to move it back.

Please watch out for the language in that last paragraph. It seems clear but some people interpret moving forwards and back as moving time and other people interpret it as moving the value around.

Questions

The following represent good sample questions that would help you prepare for an exam:

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