Fundamental Concepts for Effective Financial Analysis and Decision Making
This course provides a comprehensive introduction to the Mathematics of Time Value of Money (TVM), a fundamental concept in finance. Students will explore the relationship between time and the value of money, learning how to apply key mathematical principles to analyze and solve financial problems. The course covers essential techniques used to evaluate investments, loans, and other financial instruments, with a strong focus on practical applications.
What you’ll learn
- Understand and apply the basic principles of Time Value of Money (TVM) in various financial contexts..
- Calculate present value (PV) and future value (FV) of lump sums, annuities, and perpetuities using TVM formulas..
- Assess the impact of interest rates, compounding frequencies, and time periods on the value of money..
- Apply discounting methods to determine the present value of future cash flows and investments..
Course Content
- Introduction –> 1 lecture • 10min.
- Simple Interest –> 19 lectures • 2hr 5min.
- Bank Discount –> 9 lectures • 56min.
- Compound Interest –> 12 lectures • 1hr 29min.
- Annuities –> 21 lectures • 2hr 36min.
Requirements
This course provides a comprehensive introduction to the Mathematics of Time Value of Money (TVM), a fundamental concept in finance. Students will explore the relationship between time and the value of money, learning how to apply key mathematical principles to analyze and solve financial problems. The course covers essential techniques used to evaluate investments, loans, and other financial instruments, with a strong focus on practical applications.
Key topics include:
- Time Value of Money Concepts: Understanding the basic principles of time value, including the effects of interest rates and compounding.
- Present Value and Future Value: Learning how to calculate present and future values of single sums, annuities, and perpetuities.
- Discounting and Compounding: Mastering the processes of discounting future cash flows to present value and compounding present values to future values.
- Annuities and Perpetuities: Analyzing regular cash flows, including ordinary annuities, annuities due, and perpetuities.
- Interest Rate and Cash Flow Adjustments: Determining unknown values such as interest rates, time periods, and payment amounts in various financial scenarios.
Through a combination of theory and real-world problem-solving, students will develop the mathematical skills necessary for making sound financial decisions. This course is essential for those pursuing careers in finance, accounting, economics, and business, as well as anyone interested in understanding the numerical foundations of financial planning and investment analysis.