4.3 Discussion: Time Value of Money

by

 

Getting Started

Upon successful completion of the course material, you will be able to:

  • Compute and interpret various calculations for the time value of money.

Resources

  • Textbook: Foundations of Financial Management
  • Website: Connect

Background Information

The textbook explains the importance of understanding time value of money:

Understanding the techniques of compounding and moving money through time is critical to almost every business decision. It will help you to understand things as how stocks and bonds are valued, how to determine the value of a new project, how much you should save for your childrens education, and how much your mortgage payments will be.

Instructions

  1. Review the rubric to make sure you understand the criteria for earning your grade.
  2. Review Chapter 9 in Foundations of Financial Management.
  3. Review the videos and other learning support resources for this weeks assignments in the Connect Multimedia Library to help further understanding.
  4. Navigate to the threaded discussion and respond to the following:
    1. How does compound interest differ from simple interest, and why is the present value of a future sum always less than that sums future value? 
    2. What is an amortized loan and what is the relationship between the interest rate and number of years on an amortized loan and the total amount of interest paid?
  5. Your initial post is due by the end of the fourth day of the workshop. Your response should be 200 to 300 words in length and include one academic source that is properly cited.
    1. For questions on APA style, go to .
  6. Read and respond to at least two of your classmates postings, as well as all follow-up instructor questions directed to you, by the end of the workshop. Each response should be at least 100 words and include one academic source that is properly cited.
  7. Your postings should also:
    1. Be well developed by providing clear answers with evidence of critical thinking.
    2. Add greater depth to the discussion by introducing new ideas.
    3. Provide clarification to classmates questions and provide insight into the discussion.