4.4 assignment: time value of money web page
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
There are different applications to the time value of money, including solving for the present value of a future sum or series of sums (called “discounting”), or solving for the future value of a single sum or series of sums (called “compounding”). In this assignment, you will answer questions related to various applications of the time value of money.
Instructions
- Review the rubric to make sure you understand the criteria for earning your grade.
- Review Chapter 9 from Foundations of Financial Management.
- Review the videos and other learning support resources for this week’s assignments in the Connect Multimedia Library to help further understanding.
- Respond to the following questions:
- What is the time value of money, and why is it important?
- The processes of discounting and compounding are related. Explain this relationship.
- How would an increase in the interest rate (r) affect the future value (FV) of a sum of money? How would a decrease in the holding period (n) affect the future value (FV) of a sum of money? Explain why.
- What is an annuity? Distinguish between an annuity and a perpetuity.
- When you have completed your assignment, save a copy for yourself and submit a copy to your instructor by the end of the workshop.
