Slide C-1UCSB, AndersonThe Time Value of Money/ Present ValuesAppendix CSlide C-2UCSB, AndersonTHIS IS ABOUT THE BASICSYou should become familiar with the concept of present values and the basics of how they work using the tables. This is NOT intended to be a comprehensive course in business finance covered in 1 hour!Slide C-3UCSB, AndersonCONCEPT #1What is worth more:(A)$1 todayOR(B)$1 One year from today?$1 todayIF you invested that $1 for one year at only 3% interest compounding monthly, you would have $1.0304 at the end of the year! What would you rather have in one year…$1 or $1.0304?Slide C-4UCSB, AndersonCONCEPT #2The impact of compounding interest is EXPONENTIAL!!!
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