bus math qrb 501 wk5 qu-3


Model for Time Value of Money

Two observations & a question

Two things to keep in mind as you are going through these formulas and doing your calculations this week are:


1.  In this course, Present Value (PV) will always be less than Future Value (FV) because it is assumed that the money is earning interest.


2.  You may use the tables, but you are not required to use them to do these problems.  You may use the formula and calculated everything on your calculator if you are not comfortable looking up a number in the table.  Whichever technique you choose, you need to be comfortable with it because you will need to use it on the quiz and the final exam.


Now class, in looking at the Time Value Formulas, why is the top value in the table on the 1 row and 1% column $1.01 on the future value sheet and $1.00 on the future value of an annuity sheet?

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