Unit 2: Time Value of Money: Future Value, Present Value, and Interest Rates
Suppose you have the option of receiving $100 dollars today vs. $200 in five years. Which option would you choose? How would you determine which is the better deal? Some of us would rather have less money today vs. wait for more money tomorrow. However, sometimes it pays to wait. Unit 2 introduces the concept of time value of money and explains how to determine the value of money today vs. tomorrow by using finance tools to determine present and future values. Also, Unit 2 exposes the concept of interest rates and how to apply them when multiple periods are considered.
Completing this unit should take you approximately 8 hours.
2.1: The Time Value of Money
2.2: Future Value and Compounding
2.3: Present Value and Discounting
2.3.1: Present Value, Single Amount
2.3.2: Present Value, Multiple Flows
2.3.3: How Capital Budgeting is Used to Make Decisions
2.3.4: Present Value Interest Factor
2.4: Variable Rates of Return
2.4.1: Time-Varying Rates of Return and the Yield Curve
2.4.2: Time Varying Interest Rates and Yield Curves
2.5: Special Applications: Perpetuities and Annuities
Unit 2 Assessment