APPENDIX B
TIME VALUE OF MONEY
Related Assignment Materials
Student Learning Objectives Quick Studies* Exercises*
Conceptual objectives:
C1. Describe the earning of interest
and the concepts of present and
future values.
B-1 B-11, B-19
Procedural objectives:
P1. Apply present value concepts
to a single amount by using
interest tables.
B-2, B-3, B-4 B-1, B-2, B-12, B-13, B-18, B-19
P2. Apply future value concepts to
a single amount by using
interest tables.
B-5 B-3, B-4, B-5, B-6, B-17, B-18, B-19
P3. Apply present value concepts
to an annuity by using interest
tables.
B-6 B-7, B-8, B-9, B-10, B-11, B-12, B-13,
B-18, B-19
P4. Apply future value concepts to
an annuity by using interest
tables.
B-7 B-14, B-15, B-16, B-17, B-18, B-19
Connect (Available on the instructor’s course-specific website) repeats all numerical Quick Studies, all
Exercises and Problems Set A. Connect provides new numbers each time the Quick Study, Exercise or
Problem is worked. It allows instructors to monitor, promote, and assess student learning. It can be used
in practice, homework, or exam mode
B-1
Alternate Demonstration Problem
Appendix B
Sarah Blue has the three options:
1. Receiving $1,000 per year for the next 10 years:
2. Receiving $6,000 in cash immediately or
3. Receiving $10,000 in cash after 5 years.
Assuming that the current interest rate is 10%, and that Blue wants the
option that yields the highest present value, which option should she
choose?
B-3
Solution: Alternate Demonstration Problem
Appendix B
The present value of $1,000 received annually for 10 years discounted at
10% equals $6,145.
The present value of $10,000 to be received five years from now is $6,209.
B-4