This case provides a tutorial on the basic concepts associated with straightforward time-value-of-money scenarios. The topics of future value (FV) and present value (PV) are discussed and exemplified for both lump sum and recurring cash flow situations. In this vein, the derivation and use of four useful time-value-of-money reference tables is presented to highlight the underlying logic, connections, and mechanics of determining FVs and PVs. The case also provides students with several simple vignettes in which they can apply the foregoing time-value-of-money insights and techniques. The case can be effectively used in degree and nondegree programs, and it requires no additional reading materials. It is well suited for one 90-minute class period and all, or selected subsets of the vignettes contained in it may be assigned. A teaching note is available to registered faculty.
Darden Business Publishing – University of Virginia