Chapter 3 The Time Value of Money (Part 1)

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Learning Objectives

  1. LO1 Calculate future values and understand compounding.

  2. LO2 Calculate present values and understand discounting.

  3. LO3 Calculate implied interest rates and waiting time from the time value of money equation.

  4. LO4 Apply the time value of money equation using formula, calculator, and spreadsheet.

  5. LO5 Explain the Rule of 72, a simple estimation of doubling values.

Suppose on the day you were born a relative opened a $15,000 savings account for your college education. The account was set to grow at 5% per year, and you would be eligible to withdraw the money on your eighteenth ...

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