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Classroom Resources

Econ Ed Live Online Learning

To register your students for this course, visit the Instructor Management Panel.

Time Value of Money

The financial security that comes with wealth accumulation requires an understanding of the time value of money. Students begin this course with a lesson on opportunity cost, the most fundamental consideration in any personal financial decision. Students move on to a lesson about interest where they recognize the importance of interest in sheltering them from the higher cost of living they are certain to experience in later years. The increase in their future cost of living will be due to inflation, the third subject they encounter in this program. Students use their knowledge of opportunity cost, interest and inflation to determine the future value of investments they may make as young adults and the present value of a sum of money they hope to have at a later date. Therefore, we recommend students work through each module.

In Time Value of Money, students will:

• define opportunity cost and identify the opportunity cost of decisions, both financial and non-financial.
• define interest and apply their knowledge in choosing the offer that results in the greatest monetary gain.
• define inflation and explain why people have a time preference for money.
• define future value, explain its meaning, describe its mathematical components and calculate it using the future value formula.
• define present value, explain its meaning, describe its mathematical components and calculate it using the present value formula.