 Module Description

Principles of Finance

Contents

This module is aimed at students who are taking their first course in finance. This module introduce students to the concepts of future value and present value, the time value of money. These concepts are the foundation for higher level finance coures.

The following is a list of the specific topics this module covers.

1. Future Values of Amounts:
• Part 1: Future value of one amount. Future value of one amount with a non-annual compounding period.
• Part 2: Future value of several different amounts.
• Part 3: Future value of one amount with a change of interest rate.
• Part 4: Solve for the annual compounding interest rate.
• Part 5: Solve for the length of the holding period.

2. Future Values of Annuities:
• Part 1: Future value of one ordinary annuity. Future value of an annuity with a non-annual compounding period. Future value of one annuity due.
• Part 2: Future value of an annuity with a change of payment amount.
• Part 3: Future value of an annuity with a change of interest rate.
• Part 4: Solve for the annual compounding interest rate.
• Part 5: Solve for the length of the holding period.
• Part 6: Solve for the payment amount.

3. Present Values of Amounts:
• Part 1: Present value of one amount. Future value of one amount with a non-annual compounding period.
• Part 2: Present value of several different amounts.
• Part 3: Present value of one amount with a change of interest rate.
• Part 4: Solve for the annual discounting interest rate.
• Part 5: Solve for the length of the holding period.

4. Present Values of Annuities:
• Part 1: Present value of one ordinary annuity. Present value of an annuity with a non-annual compounding period. Present value of one annuity due.
• Part 2: Present value of an annuity with a change of payment amount.
• Part 3: Present value of an annuity with a change of interest rate.
• Part 4: Solve for the annual discounting interest rate.
• Part 5: Solve for the length of the holding period.
• Part 6: Solve for the payment amount.

5. Comprehensive Example:
• Loan Amortization.
• Short scenarios requiring the application of future value and/or present value.

Pre-requisites for this Module

There are no college level pre-requisites for this module. Only a knowledge and understanding of basic math is needed. That understanding includes the ability to perform computations with percentages, fractions, and exponents.

This module is a pre-requisite for the Corporate Financial Management I and Personal/Household Finance modules.

Sample Module.