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3aappendixc - THIS IS ABOUT THE BASICS The Time Value of...

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Slide C-1 UCSB, Anderson The Time Value of Money/ Present Values Appendix C Slide C-2 UCSB, Anderson THIS IS ABOUT THE BASICS You 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-3 UCSB, Anderson CONCEPT #1 What is worth more: (A) $1 today OR (B) $1 One year from today? $1 today IF 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-4 UCSB, Anderson CONCEPT #2 The impact of compounding interest is EXPONENTIAL!!!
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