WFU Law School
Law & Valuation
Chapter 1 - Time value of money

1.1 Introduction-Money and Time

Money, like space, exists in time. There is a difference between $1 today and $1 one year from now. This fundamental insight, sometimes easy to overlook, affects how we make present money-based decisions. It should also guide legal decision-makers.

This section looks at the symmetric relationship between present and future value, as well as how each can be computed from the other.


1.1.1 - Present value and future value

Time value of money affects our most basic financial decisions. Your bank pays you for the time you keep your money deposited in your savings account. You pay your student loan company for the time you use its money to finance your education. (More 1.1.1>>)

1.1.2 - Computing present and future values

It used to be that computing present and future values involved mind-numbing calculations using imprecise financial tables. Today calculators and computer spreadsheets significantly simplify the human task by turning the many calculations over to silicon chips. Quick and accurate present value computing has revolutionized our financial world. (More 1.1.2>>)

 

Chapter Subsections

 

Chapter 1 - Time value of money

©2003 Professor Alan R. Palmiter

This page was last updated on: March 8, 2005