Time Value of Money

5 Future vs. Present (Student)

When talking about interest there are two values of money the future value and the present value. The future value is asking how much will this money today be worth at a specific point in the future given the interest rate and number of periods in which interest is earned. An example of this would be wanting to know how long an investment of $5000 would take to reach a future value of $10000 at a 2% interest rate or how much that $5000 investment would be worth after X number of periods. With finding present value you might be asking the question how much should I invest now to have a future value of $10000 in 5 years at an interest rate of 2%.

#6 Eye opener (Professor)

I have just watched the first 10 minuets of this video and I would have to say that this is truly the eye opener for me and I have put it on my play list to watch them even if this class is ended.

I have been using some functions in Excel, especially on present value, future value, both in Financial and accounting classes, but not to the extend at this video has touched. there are just so much more to learn, it never ends.

I have not truly used the “type” in the PV and FV functions as I thought it was not that important, and I guess I am very wrong.

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