1
Time Value of Money Question
You are offered two options to receive a
cash payment.
Option A: $100 today
Prof. Q. Ma
HADM 2222: Time Value of Money
0
Option B: $107 in future year t
Which one is more valuable to you?
General Question
Earlier time
Later time
Prof. Q. Ma
HADM 2222: Time Value of Money
1
Time Line
$$$$
(PV)
$$$$$$
(FV)
Learning Objectives
Be able to compute
The FV of a cash payment made today
The PV of cash at some future date
The return (r) on an investment
The number of periods (T) that equates a PV
Prof. Q. Ma
HADM 2222: Time Value of Money
2
The number of periods (T) that equates a PV
and an FV given an interest rate (r)
Be able to use a financial calculator to
solve TVM problems

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