Time value analysis has many applications. For example, you use time value of money concepts in
valuing stocks and bonds, establishing loan payment schedules, and deciding whether or not to
invest in a new plant and/or equipment. As one of the more important topics in finance, time value
of money underlies many other concepts covered in this course, so it is very important to not only
understand the concept, but also to be able to compute time value of money problems that involve
compounding and discounting skills. As you read through the examples in your readings, you might
feel this is a very difficult topic. You may have difficulty relating to time value analysis because the
context of the problems is presented in a textbook. Learning tends to be richer and long lasting
when you can define your own problems and background contexts.
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