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Lecture 12

# RCSC 150B2 Lecture 12: Time value of money pt 1 Premium

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School
Department
Retailing & Consumer Science
Course
RCSC 150B2
Professor
Richardrosen
Semester
Fall

Description
find more resources at oneclass.com Friday, September 30, 2016 Time value of money pt 1 MCF Time Value of Money • CHAPTER PLAY LIST SONGS: • “All Work and No Play” by Van Morrisondgren • “Sixteen Tons” by Tennessee Ernie Ford Learning Objectives • LO 2-1 Explain what gives paper currency value and how the Federal Reserve Banks manage its distribution. • LO 2-2 Differentiate between simple and compound interest rates and calculate annual percentage yields and the value of paying yourself first. • LO 2-3 Calculate the future and present value of lump sums and annuities in order to know what to put aside to meet your personal financial goals. What Gives Money Value • “The mint makes it first, it is up to you to make it last” ~ Errol Flynn • Foreign Exchange Rates • Why does the dollar’s value change in relationship to other currencies? • What gives the U.S. dollar value? • What is going on with the supply of U.S. currency? • Who controls the money supply for the United States? • Why is the U.S. dollar in demand? What is its competition? • US Debt Clock Look at a Dollar Bill Facts about dollar bills Power of Compounding “The most powerful force in the universe is compound interest” ~ Albert Einstein Compounding Interest • Compounding: Process whereby the value of an investment increases exponentially over time due to earning interest on interest previously earned • Annual Percentage Rate (APR): Annual rate charged for borrowing or made by investing • Annual Percentage Yield (APY): Effective yearly rate of return taking into account the effect of compounding interest ▯1 find more resources at oneclass.com find more resources at oneclass.com Friday, September 30, 2016 Simple Interest vs. Compound Int
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