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MathBusFin Lecture Basic Long-Term Financial Concepts

and Introduction to Investments
Accountancy (University of Northern Philippines)

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MODULE 2: Basic Long-Term Financial Concepts and

Introduction to Investments

CONTENT STANDARD

At the end of the second module, you are expected to demonstrate an

understanding of basic long-term financial concepts that focus on the time value of

money, the future and present value computations using different cash flow patterns,

the different types of investments, advantage and disadvantages of investments and

lastly, the guidelines and principles how to manage personal finance, the basic

concepts in investing and managing personal funds.

PERFORMANCE STANDARD

At the end of the second module, you are expected to transfer learning by: (1)

practicing financial understanding for analytical interpretation in business management

perspective, either short-term or long-term operation; (2) identifying and becoming

aware of the process of investment; and (3) practicing the basic guidelines and

principles on how to save and invest personal funds.

ESSENTIAL QUESTIONS

How do you calculate future value and present value of money? How can you

apply mathematical concepts and tools in computing for finance and investment

problems? How do you measure and list ways to minimize or reduce investment risks?

Write your answers here:

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Lesson 1: Basic Long-Term Financial

Concepts
“The greatest invention of mankind is compound interest.”

What is compound interest? In this lesson, we will explain the nature of

compound interest, the basic formulas used, and their applications in common financial

transactions. We will emphasize in this chapter that any individual should be familiar

with the concept of compound interest and the time value of money in general, as many

business transactions and decisions apply and require an understanding of these

concepts.

Families decide on which financing option to pursue in the acquisition of

significant family assets such as houses, cars, and appliances based on time value of

money concepts. Similar concepts are applied by individuals, even students, when they

decide on the payment schemes they would avail when purchasing their own mobile

phones, computers, etc.

The mathematics of the time value of money, particularly the computation of the

present and future values, is illustrated in this chapter. Financial literacy requires

familiarity with these calculations. The financial difficulties experienced by individuals

and businesses may sometimes be attributed to their ignorance or misapplication of the

time value of money.

Before we proceed, let me present to you the learning competencies you are

expected to learn at the end of this lesson.

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 discuss the concept of interest

 compute the simple interest

 compute the compound interest

 calculate future value and present value of money

 calculate multiple cash flow

 compute for the present value interest factor for an annuity (PVIFA)

 compute for the effective annual interest rate

 compute loan amortization using mathematical concepts and the present

value tables

 apply mathematical concepts and tools in computing for finance and

investment problems

 compare and contrast the different types of investments

I believe you are now ready. Onwards.

As we start this new exciting journey, be mindful about all the topics that will be

discussed here for you might need them for reference on you future personal or even

business transaction with any bank in your area. Up to go!

INTRODUCTION

In general business terms, interest is defined as the cost of using money over

time. This definition ts in close agreement with the definition used by economists, who

prefer to say that interest represents the time value of money.

Interest is the excess of resources (usually cash) received or paid over the

amount of resources loaned or borrowed which is called the principal. The cost of the

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excess resources to the borrower for the use of the money is called interest expense.

The benefit of the excess resources to the lender of the money is called interest

revenue.

Beyond straightforward borrowing or lending situations, interest calculations and

the time value of money are key considerations also in negotiating transactions that call

for payment over one or more future time periods. Interest and time value are

considerations in decisions involving expenditures for business investments and the

acquisition of operating assets; both types of expenditures are expected to produce

returns over one or more future periods. Time value of money involves two major

concepts: future value and present value. Both concepts consider three factors (1)

principal, (2) interest rate, and (3) time period.

Business transactions subject to interest state whether simple or compound

interest is to be calculated.

EXPLORE

Before proceeding to the main topic, let’s have first some activity to test your

knowledge regarding interest.

Activity: Concept Notes

Activity No. 1: Simple and Compound Interest

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.
FIRM-UP

TIME VALUE OF MONEY

“A peso today is worth more than a peso tomorrow’. All individuals and

businesses face the same two basic finance-related problems:

1. Where to put the money?

2. Where to get the money?

The first problem is called the “investment” decision; the second, the “financing”

decision. In addressing the investment problem, individuals and companies choose from

a wide range of real and financial assets. They can opt to put their funds in real assets

that represent their various projects. Real asset investments include purchasing

equipment and machinery with the purpose of generating revenues across the useful

lives of these assets. This could also take the form of adding a new wing to their office

building or factory. The acquisition of license brands is also considered a real asset

investment. Financial assets include investing in the shares of another company.

Lending money to others and purchasing fixed income instruments such as

government-issued Treasury securities and corporate bonds are also considered

financial investments.

A common characteristic of these investments is that, most of the time, the

expected returns from these assets do not happen overnight or even within the current

year. Cash flows related to these assets occur at multiple time periods and may happen

over an extended period of time.

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Addressing the financing problem requires businesses to seek out funding

sources such as equity infusion by investors or borrowing from financial institutions such

as banks. The cash inflows in acquiring the funds and outflows related to the payment

of dividends to the owners and the repayment of principal and interest to creditors are

likely to occur in the long term.

Because cash flows occur at extended periods of time, the time value of money

must be considered in making the appropriate investment and financing decision.

Individuals prefer to receive a peso now instead of later because of the following main

reasons: (a) it can invest the peso now and earn a return from this investment and (b) a

peso expected to be received in the future is riskier and less certain. We consider the

time value of money to make these cash flows comparable, We either determine their

future value at a common future date or compute for their present value today so as not

to compare “apples” against “oranges.”

Activity: Self-Test Questions

Activity No. 2: Time Value of Money

Learning Target: To explain briefly the time value of money concept

THE CONCEPT OF INTEREST

The most basic finance-related formula is the computation of interest. It is

computed as follows:

(Equation 1) I = P x R x T

where:

I= Interest

P = Principal

R = Interest Rate \
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T = Time Period

Interest is earned or incurred for the use of the principal amount over the relevant

time period. For example, an individual borrowed ₱1,000 from a local bank at an

interest rate of 9% over a one-year period. In this example, the ₱1,000 amount

borrowed is the principal of the loan; 9% is the applicable interest rate; and the relevant

time period is one year. The interest on the loan is computed as:

I=PxRxT

₱90 = ₱1,000 x 9% x 1 year

Thus, the interest on the loan is ₱90. This ₱90 is the cost of using the ₱1,000

borrowed for one year.

Let’s have an exercise regarding interest computation.

Activity: Self-Test Questions and Exercises

Activity No. 3: Interest

SIMPLE INTEREST

If the interest earned or incurred is always based on the original principal, them

simple interest is assumed. For example, you invested ₱10,000 for 3 years at 9% and the

proceeds from the investment will all be collected at the end of 3 years. Using a simple interest

assumption, interest will be computed as follows:

Cumulative
Year Principal Rate Time Interest Interest Total
1 ₱10,000 9% 1 ₱900 ₱900 ₱10,900
2 ₱10,000 9% 1 ₱900 ₱1,800 ₱11,800
3 ₱10,000 9% 1 ₱900 ₱2,700 ₱12,700

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Interest in this example, is always calculated based on the original principal of

₱10,000. Under this assumption, the interest for every year is the same, in this case, ₱900

annually. The total interest for the three-year period is ₱2,700 (₱900 x 3 years).

Let’s answer this next activity.

Activity: Self-Test Questions and Exercises

Activity No. 4: Simple Interest

Learning Target: Compute the simple interest

COMPOUND INTEREST

The usual assumption in most business transactions is to use compound interest.

Compound interest is simply earning interest on interest. This means that the basis for

the computation of the applicable interest for a certain period is not only the original

principal but also any interest earned in the previous period assuming all cash flows

would be paid or received in lump sum upon maturity.

Using the previous example where you invested ₱10,000 for 3 years at 9% and

the proceeds from the investment will all be collected at the end of 3 years, we illustrate

the computation of compound interest. Using a compound interest assumption, interest

will be computed as follows:

Principal +
Year Cumulative Rate Time Interest Cumulative Total
Interest Interest
1 ₱10,000 9% 1 ₱900 ₱900 ₱10,900
2 ₱10,900 9% 1 ₱981 ₱1,881 ₱11,881
3 ₱11,881 9% 1 ₱1,069.29 ₱2,950.29 ₱12,950.29

Interest, in this example, is increasing per period because the principal is also

increasing by the amount of interest earned in the previous year. Under this

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assumption, the interest for every year is no longer the same but is higher as it nears

maturity. The total interest for the three-year period is ₱2,950.29. This is the sum of the

increasing interest for the three-year period (P900 + P981 + P1 069.29).

Let us now have another activity

Activity: Self-Test Questions and Exercises

Activity No. 5: Compound Interest

FUTURE VALUE OF MONEY

In the previous example, the value of the investment at the end ₱10,900

computed as follows:

Value at the End of Year 1 = ₱10,000 + (P10 000 x 9% x 1 year)

₱10 900 = ₱10 000 x (1 + 9%)

We, therefore, say that given an interest rate of 9%, the future value of ₱10,000

after one year is ₱10,900.

Similarly, the future value of the ₱10,000 at the end of year 2 will be equal to the

value at the end of year 1 plus the compound interest earned in year 2 as shown below:

Value at the End of Year 2 = ₱10,900 + (₱10,900 x 9% x 1 year)

₱11,881 = ₱10,900 x (1 + 9%)

₱11,881 = ₱10,000 x (1 + 9%) x (1 + 9%)

₱11,881 = ₱10 000 x (1 + 9%)2

The future value then at the end of year 3 is determined as follows:

Value at the End of Year 3 = ₱11,881 + (₱11,881 x 9% x 1 year)

₱12,950.29 = ₱11,881 x (1 + 9%)

₱12,950.29 = ₱10 900 x (1 + 9%) x (1 + 9%)

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₱12,950.29 = ₱10,000 x (1 + 9%) x (1 + 9%) x (1 + 9%)

₱12,950.29 = ₱10,000 x (1 + 9%)3

The future value of ₱10,000 invested for 3 years at a rate of 9% is equal to

₱12,950.29.

Therefore, we use the general formula below to determine the future value:

(Equation 2) Future Value = Initial Value x (1 + R)T

Where: R = Interest Rate

T= Time Period

To get the future value, we multiply the initial value by (1 + R) T which is referred

to as the future value interest factor (FVIF).

A future value table can be developed using the above formula. Simply find the

intersection of the relevant time period (T) presented in the rows of the table and the

relevant interest rate (R) presented in the columns of the table.

Using our example, the FVIF given 3 years and a rate of 9% is equal to 1.2950.

This is the intersection of time period = 3 and interest rate = 9% in the FVIF table.

This is equal to (1 + 9%)3 = 1.2950 (rounded off to 4 decimal places}.

To get the future value of our example:

₱12,950.29 = ₱10,000 x (1 +R)T

₱12,950.29 = ₱10 000 x (1 + 9%)3

₱12,950.29 = ₱10,000 x 1.2950

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Future Value Interest Factor (FVIF) = (1 + R)T

Let us now have another activity..

Activity: Self-Test Questions & Exercises

Activity 6: Future Value of Money

PRESENT VALUE OF MONEY

To make cash flows comparable, we either determine their future value at a

common future date or compute their present value today. Most decision makers

choose to get the present values since the decisions are made today.

To get the present value of a lump-sum amount, we go back to Equation 2:

Future Value = Initial Value x (1 + R)T

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The future value in the formula is the expected lump-sum amount while the initial

value is actually the present value. Rearranging Equation 2 gives us the formula for the

present value of money:

Present Value = Future Value

-----------------
(1+R)T

(Equation 3) Present Value = Future Value x 1

--------
(1 +R)T

To get the present value, we multiply the future lump-sum amount by 1 / (1 + R)T

which is referred to as the present value interest factor (PVIF). The PVIF is also called

the discount factor and the whole process of determining the present value is referred to

as discounting. The interest rate used to get the present value is denoted as the

discount rate.

For example, your father told you that he will entrust you with the funds for your

graduate program education. He gave you two options: (1) receive the money now in

the amount of ₱200,000 or (2) receive ₱500,000 ten years from now. The available

investment opportunities to you provide a 10% rate of return. Which option would you

prefer?

To address this dilemma, you either determine the future value of the ₱200,000

and compare it with the expected cash flow of ₱500,000 ten years from now, or

compute the present value of the ₱500,000 and compare it to the ₱200,000 which you

can receive today.

Choosing the second method will require you to get the present value of the

₱500,900 as shown below:

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Present Value = Future Value

------------------
(1 +R)T

= 500,000
-----------
(1 + 10%)10

Present Value = ₱192,771.64

₱192,771.64 < P200 000

Since the ₱200,000 is greater than ₱192,771.64 (the present value of the

₱500,000), you will choose to receive the ₱200,000 today instead of waiting for it in ten

years’ time. Getting it now will give you the opportunity to grow the investment at the

rate of 10% and the related future value is expected to be greater than the ₱500,000. To

validate this, we compute for the future value of the ₱200,000:

Future Value = Present Value x (1 + R)T

= ₱200,000 x (1 + 10%)10

Future Value = ₱518,748.50

₱518,748.50 > P500 000

A present value table can also be developed using the present value interest

factors. Simply find the intersection of the relevant time period (T) presented in the rows

of the table and the relevant interest rate (R) presented in the columns of the table.

Using our example, the PVIF given 10 years and a rate of 10% is equal to

0.3855. This is the intersection of time period = 10 and interest rate = 10% in the PVIF

table.

This is equal to 1 = 0.3855 (rounded off to four decimal places)

-------- .
(1+ 10%)10

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To get the present value of our example:

₱192,750 = ₱500,000 x 0.3855

₱192,750~₱192,771.64

How do you decide if you are taking the point of view of the person disbursing

money In this case, you will choose the cheaper option or the one with the lower

present value.

For example, your school’s annual tuition fee is ₱100,000 per year. If you pay at the

start of the school year. Another option is to pay higher amount of ₱110,000.

Let us say that the prevailing interest rate is equal to 12%. To make the cash

flows comparable, we compute for the present value of the ₱110,000:

Present Value = ₱110,000

-------------
(1 +R)T

= ₱110,000
-------------
(1 + 12%)1

Present Value = ₱98,214.29

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The present value of ₱110,000 is equal to ₱98,214.29 which is cheaper than

paying ₱100,000 at the start of the school year. So, if you forego paying at the start, you

can invest the ₱100,000 for one year at a rate of 12%. This will grow to ₱112,000

(₱100,000 x 1+ 12%) after a year which is more than enough to pay for the required

₱110,000 payment at the end of the year.

Will your decision be different if the interest rate is at 8%? The present value of

the ₱110,000 is:

Present Value = ₱110,000

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------------
(1 +R)T

= ₱110,000
--------------
{1 + 8%)1

Present Value = ₱101,859.90 ;

₱101,851.90 is more expensive than the ₱100,000 option at the start of the

school year. At an interest rate of 8%, you should choose to pay the ₱100,000

immediately instead. If you insist on paying at the end, then your ₱100,000 will grow to

₱108,000 (₱100,000 x 1 + 8%) which is not enough to cover for the required payment of

₱110,000 at the end.

Let’s have another activity.

Activity: Self-Test Questions & Exercises

Activity 7: Present Value of Money

MULTIPLE CASH FLOWS

To a certain extent, all our examples contemplate a single lump-sum cash flow at

the end of the term. If multiple cash flows occur at different times, the more difficult it

becomes to compare these cash flow streams. Getting their present values becomes

more imperative in order to make an appropriate decision. Simply get the present

values of the individual cash flows and add them together. Since the present values

refer to the same date (today), these are value-additive.

Let us say that you are contemplating on purchasing a new laptop computer

which is worth ₱70,000 if you pay for the whole amount today. The computer store also

allows buyers to pay in instalment requiring the buyer to pay ₱25,000 annually at the

end of each year for the next three years. You regularly invest your savings in a time
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deposit account that provides an annual return of 5%. You are now deciding whether to

avail of the instalment plan or pay for the whole amount today. To aid you in your

decision, you heed to get the present value of the multiple cash flows and compare it

with the ₱70,000 cash price. Since the perspective taken is that of the individual

disbursing money, you need to choose the cheaper option (lower present value).

You can follow the steps below in addressing this problem:

1. Draw a timeline illustrating the relevant cash flows and the timing of these cash

flows.

2. Compute for the present values of each cash flow using the appropriate interest

(discount) rate.

3. Add the individual present values and compare the sum to the cash price.

Step 1:

Draw a timeline:

Time =

0 1 2 3
25,000 25,000 25,000

Steps 2 and 3:

Compute the individual present values and get the sum:

Total Present Value = ₱25.000 + ₱25.000 + ₱25.000

----------- ----------- -----------
(1+R)1 (1+R)2 (1+R)3

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Total Present Value = (₱25,000 x PVIF) + (₱25,000 x PVIF) + (₱25.000 x PVIF)

Total Present Value = (₱25,000 x 0.9524) + (₱P25,000 x 0.9070) + (₱25,000 x

0.8638)

Total Present Value = ₱23,810 + ₱22,675 + ₱21,595

Total Present Value = ₱68,080

₱68 080 is cheaper than the ₱70,000 cash price which means you should pay

through instalment instead. Simply adding the three ₱25,000 payments may lead you to

think that the ₱70,000 is cheaper but the more relevant figure should be the present

values of these multiple cash flows of these multiple cash flow.

Let’s have another activity.

Activity: Self-Test Questions & Exercises

Activity 8: Present Value of Money – Multiple Cash Flows

Learning Target: To calculate present value of money with multiple cash flows.

ANNUITIES

In the previous example, the instalment plan requires the buyer to pay equal

payments of ₱25,000 each year. This is an example of an annuity - a series of equal

cash flows - payments in this case, required for a specific number of periods. Instead of

computing the individual present values by multiplying each cash flow by the relevant

present value interest factor, an easier way is to multiply the equal cash flow stream by

the present value interest factor for an annuity (PVIFA). The computation for the PVIFA

is provided in the formula below:

(Equation 4) Present Value of an Annuity = C x ([1 ÷ R] – [1 ÷ R{1 + R}T] )

Where:

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C = Equal Cash Flow Stream

R = Interest Rate

T = Time Period

A present value interest factor for an ordinary annuity (PVIFA) table can also be

developed using the formula above. Simply find the intersection of the relevant time

period (T) presented in the rows of the table and the relevant interest rate (R) presented

in the columns of the table.

Using our example, the PVIFA given 3 years and a rate of 5% is equal to 2.7232.

This is the intersection of time period = 3 and interest rate = 5% in the PVIFA table.

To get the present value of our example:

₱68,080 = ₱25,000 x 2.7232

Our example is called an ordinary annuity since the cash flow is required at the

end of each year. If the cash flow happens at the start of the year, then it is called an

annuity due.

if the cash flow stream lasts forever or is indefinite, then it is called a perpetuity.

The Present value of a perpetuity is determined by simply dividing the equal cash flow

stream by the appropriate interest rate. Let us say, you expect to receive ₱25,000

annually (5% interest rate) in perpetuity then the present value is determined by:

(Equation 5) Present Value of a Perpetuity = Perpetuity

--------------
R

500 000 = ₱25.000

---------
5%

Let’s have another activity.

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Activity: Self-Test Questions & Exercises

Activity 9: Present Value Interest Factor of an Annuity

Present Value Interest Factor for an Annuity = 1 - 1
------ -------
R R(1+R)T

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LOAN AMORTIZATION

A classic example of a business transaction that pays out an equal cash flow

stream regularly is an amortizing loan. Most housing and car loans are amortizing

loans that require the borrower to pay that equal amount either annually, semi-annually,

quarterly or most of the time, monthly.

Let us look at an example of a corporate loan to illustrate how a loan

amortization table is prepared.

Illustrative example: On July 01, 2015, DD Company borrowed ₱3 million from ASC

Bank at the rate of 10% a year. The loan is paid at the rate of ₱500,000 every

December 31 and June 30 until the full amount is paid. Below is an amortization table

for the loan.

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Amortization Table for ₱3-Million Loan

Amortization Principal Principal

Dates Payments Interest Payment Balance
3,000,000
December 31, 2015 650,000 150,000 500,000 2,500,000
June 30, 2016 625,000 125,000 500,000 2,000,000
December 31, 2016 600,000 100,000 500,000 1,500,000
June 30, 2017 575,000 75,000 500,000 1,000,000
December 31, 2017 550,000 50,000 500,000 500,000
June 30, 2018 525,000 25,000 500,000 0

Note that the interest rate of 10% is for one year. Therefore, for six months,

the interest rate is only 5%. Let us compute the interest expense from June 30 to

December 31, 2015.

Interest = ₱3,000,000 x 10% x (6 ÷ 12)

Interest = ₱150,000

For the next six months ending June 30, 2016, the interest expense is only

₱125,000 because the principal balance is already reduced to ₱2,500,000 as of

December 31, 2015.

Thus, part of the semi-annual payment is for there-payment of principal an

interest payments.

Equal Regular Payments (Principal and Interest Combined)

Some loans require equal regular payments. In this case, how is the regular

payment (C) determined?

Let us go back to Equation 4:

1 1
Present Value of an Annuity = C x ---- - ------------
R R(1 + R)T

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C = Present Value of an Annuity

-------------------------------------
PVIFA

For example, you plan to purchase a house worth ₱3,000,000. Assuming you

incur a 10-year loan that is repaid in equal annual instalments with an interest rate of

10%. What is the annual mortgage payment?

C = Present Value of an Annuity

-------------------------------------
PVIAF

C = ₱3,000,000
---------------
PVIAF(10%, 10)

₱488,236.57 = ₱3,000,000
----------------
6.144

The ₱3,000,000 borrowed is the present value of the loan that will require

equal annual payment of ₱488,236.57. The total payments will equal ₱4,882,365.70.

(₱488,236.57 x 10 years). ₱3,000,000 is for the principal borrowed and the difference of

₱1,882,365.70 is the total interest over the 10-year period.

Let’s have another activity.

Activity: Self-Test Questions & Exercises

Activity 10: Loan Amortization

Learning Target: To compute loan amortization using mathematical concepts and the

present value tables

EFFECTIVE ANNUAL INTEREST RATES

Interest rates are normally quoted as annual rates but the compounding

frequency may differ per transaction. This means that if the annual rate is 12% but

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compounding is done more frequently, for example every quarter, then the effective

annual rate is higher than 12%. To determine the effective annual rate, the following

formula is used:

(Equation 6) Effective Annual Rate = (1 + R/M)M - 1

Where:

R = Annual Interest Rate

M = Frequency of Compounding

For example, credit card companies usually charge a monthly interest rate of

3.5% (exclusive of other charges). The annual effective rate is not simply determined by

multiplying 3.5% by 12 months since this transaction assumes monthly compounding.

To get the annual effective rate, we compute the following:

Effective Annual Rate = (1 + R/M)M - 1

EAR = [1 + (3.5% = 12/12)]12 - 1

EAR = 51.11%

This means that if you purchase a ₱1,000 dress at the start of the year and did

not pay for it until after one year, then you should pay ₱1,511 already exclusive of the

other charges

An annual rate of 12% will translate into the following effective annual rates:

Annual Compounding = [1 + (12%/1)]1 - 1 = 12%.

Semi-annual Compounding = [1 + (12%/2)]2 - 1 = 12.36%

Quarterty Compounding = {1 + (12% /4)]4 -1 = 12.55%

Monthly Compounding = [1 + (12%/12)]}12 - 1 = 12.68%

Let’s have another activity.

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Activity: Self-Test Questions & Exercises

Activity 11: Effective Annual Interest Rate

Learning Target: To compute for the effective annual interest rate

BASIC APPLICATION OF THE TIME VALUE OF MONEY ON INVESTMENT

PROBLEMS

One very useful application of the time value of money is when the Net Present

Value Method is used to determining whether a project should be accepted or rejected

by a company. The basic decision rule is to accept the project if the net present value is

Positive and reject if the net present value is negative. This capital budgeting technique

is applied by determining first all the relevant cash flows, positive and negative, of a

project then calculating the present values of these cash flows using an appropriate

discount rate (given the riskiness of the project).

For example, a project requires an initial outlay of ₱100,000. The relevant inflows

associated with the project are ₱60,000 in year one and ₱50,000 in years two and

three. The appropriate discount rate for this project is 11%. To compute the net present

value:

Net Present Value = - ₱100,000 + ₱60,000 + ₱50,000 + 50,000

----------- ------------ ----------
(1 + R)T (1 + R)T+1 (1 + R)T+2

Net Present Value = - ₱100,000 + ₱60,000 + ₱50,000 + ₱50,000

------------- ----------- -------------
(1 + 11%)1 (1 + 11%)2 (1 + 11%)3

Net Present Value = - ₱100,000 + ₱60,000 x PVIF(11%,1) + ₱50,000 x PVIF(11%,2) +

₱50,000 x PVIF(11%,3)

Net Present Value = - ₱100,000 + ₱54,054.05 + 40,581.12 + ₱36,560.40

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Net Present Value = ₱31,195.57

Since the net present value is positive, then the company should accept the

project.

Let’s have another activity.

Activity: Self-Test Questions & Exercises

Activity 12: Basic Application of the Time Value of Money on Investment Problems

Learning Target: To apply mathematical concepts and tools in computing for finance

and investment problems.

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