1. Time Value of Money Future Value and Compound Interest Present Values
Finding The Interest Rate
Future Value of Multiple Cash Flows
Present Value of Multiple Cash Flows
Perpetuitıies & Annuities
Annuities Due
Future Value of an Annuity
Future Value of an Annuities versus Annuities Due
Inflation and the Time Value of Money
Inflation and Interest Rates
Effective Annual Interest Rates
Effective Interest Rates on Bank Accounts

2. Interest: The PRICE of the MONEY
INTEREST SYSTEM
Present Value or
Principal (P or PV)
Rate (r)
Annuities (A)
Periods (t)
Future Value (FV)
Interest: The PRICE of the MONEY

3. INTEREST SYSTEM FV + r % t A A A - P 1 2 3 Cash Flow Diagram
is the visual aspect of the Interest System that consists of money inflows and outflows along the time line in a given period. FV +
r % 1 2 3 t A A A - P

4. INTEREST SYSTEM The TYPES of The INTEREST SYSTEM Simple Interest
(interest payment is not added to the principle)
Discrete Compounding
(interest payment is added to the principle intervally)
Continuous Compounding
(interest payment is added to the principle Continuously)

5. Continuous Compounding
INTEREST SYSTEM
Basics Formulas
Simple Interest
FV = PV + I
FV= P (1 + r * t )
Discrete Compounding
FV = PV ( r )
FV = A [( 1 + r) - 1 ) / r ]
Continuous Compounding
FV = PV e t t rt

6. Effective Interest Rates
Sometimes calculation periods may be shorter than a year and in such situations it is mentioned from
Effective Interest Rates
t* m
FV = PV ( r )
m represents the number of periods in a year;
Monthly m = 12
Quarterly m = 4
Semiannually = 2
Continous Compounding is the case of the interest payment is added to the principal continuously and consecutively and expressed as
r*t
FV = PV e