Time value of money

High school (ages 12+)
Mathematics & Numbers

Name:

Date:

Step 1 · Read the article

Open the article and read it at the level above. Then answer the questions below in your own words.

https://smallwhale.org/articles/time-value-of-money

Write what each word means, using the article.

Do not copy the article. Write two things you learned, the way you would explain them to a friend.

Answers below are taken from the article’s stored facts, so they match what the student read.

1. What is the mathematical foundation?Involves concepts of present value, future value, interest rates, and compounding/discounting periods
2. What is the key determinants of value difference?Opportunity cost of capital, inflation expectations, and risk premium
3. What does "time value of money" mean?A dollar today can be saved or invested and grow, so it is worth more than a dollar received later.
4. Why is a dollar today better than a dollar tomorrow?Because you can use it right away to earn interest, while a future dollar waits and misses that chance.

Discounted Cash Flow (DCF): A valuation method that uses future cash flows discounted back to their present value.
Opportunity Cost: The value of the next-best alternative that must be forgone to pursue a certain action.
Annuity: A series of equal payments made at regular intervals over a specified period of time.