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