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Abstract
The main goal of this paper is presentation a modern axiomatic approach to financial
arithmetic. At the first, the axiomatic financial arithmetic theory was proposed by
Peccati who has introduced the axiomatic definition of the future value. This theory
has been extensively developed in past years. Proposed approach to financial arithmetic
is based on the financial flow utility concept. This utility function is defined as
linear extension of multicriteria comparison determined by the time preference and
the capital preference. Then the present value is equal to financial flow utility.
Therefore, the law of diminishing marginal wealth utility has been considered as additional
feature of the present value. The future value is defined as the inverse of utility
function. This definition is a generalization of the Peccati one. The net present
value is given as the unique additive extension of financial flow utility. Moreover,
the synergy effect and the diversification effect will be discussed. At the end, the
axiomatic present value definition will be specified in three ways.