Introduction to Time Value of Money

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Luc De Ceuster, MSc, PMP

Short Description:
The course “Introduction to Time Value of Money” is part of the larger course “Introduction to Finance” which will be available later.
The course provides you with the necessary information related to the principles of interest, compounded interest, and discounting of cash flows.

When dealing with investments and projects, it is important to evaluate their financial performance and the elements in this course will provide you the necessary knowledge.

Starting from investments, cash flows, and interest rates, basic principles like simple interest, compounded interest, discounting of cash flows, present value, and future value are defined in a practical way.

Based on this, basic parameters (payback time and return on investment) and more advanced parameters like Net Present Value, Performance Index and Internal Rate of Return will be defined that you will need to evaluate the financial performance.

Content of the Course

  • Investments and Cash Flows
  • Simple and Compounded Interest
  • Different Compounding Periods and Effective Annual Rate
  • Present and Future Value, Annuities
  • Discounting Cash Flows and Calculations
  • Payback of Loans
  • Simple Financial Parameters (PBT and ROI)
  • Advanced Financial Parameters (NPV, PI, and IRR)
  • Final Quiz
  • Certificate of Successful Completion (after passing the Quiz)

Learning Outcomes
After completing this course you will be able to:

  • Describe how investments and future cash flows are spread on the timeline
  • Explain the simple and compounded interest
  • Calculate the compounded interest over different compounding periods and determine the Effective Annual Rate
  • Determine the Present Value of a series of Future Cash Flows
  • Find the Future Value of Cash Flows and Annuities
  • Define different Financial Parameters like PBT, ROI, NPV, PI, and IRR
  • Explain the Limitations of and Differences of the Financial Parameters

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