Time Value of Money and Interest
Which would you prefer $10000 Today or $10000
in 5 years?
Obviously, $10000 today; you already recognize
that there is time value of money.
If you put some money on a bank account for a
year, then the bank can do whatever it wants with
that money for a year; RIGHT? To reward you for
that, the bank pays you some interest.
The more years the bank works with your money,
the more rewards you would expect to get as an
Lecture Notes on Simple Interest, Compound Interest, and Future Values – p.4/24