D076 - Module 5 - Time Value of Money

D076 - Module 5 - Time Value of Money
Time Value of Money - ✔✔✔* Idea that money is worth more today than same amount in future

* Considers amount of cash flows at different times with certain interest rate

* Language of finance



TVM Variables - ✔✔✔* Amount of cash flows

* Timing of cash flows

* Rate at which cash flow value changes due to passage of time



Present Value - ✔✔✔* Represents value of cash today

* Relative to other cash flows



Future Value - ✔✔✔* Represents value of cash at a future point in time

* Relative to other cash flows



Compounding - ✔✔✔* Finding future value given a present value



Discounting - ✔✔✔* Finding present value given a future value



Annuities - ✔✔✔* Equally spaced cash flows of equal amount paid every consecutive period



Annuity Types - ✔✔✔* Ordinary Annuity

* Annuity Due

* Perpetuity