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Time Value of Money

Compounding, discounting, annuities, loans, NPV, IRR and dated cash flows — built step by step in a live worksheet, with the same functions you use at work.

14 lessons · 46 exercises · about 4 hours · 4 free lessons

You will be able to

  • Move any cash flow through time with compounding and discounting
  • Compare loans and deposits using effective annual rates
  • Value annuities and perpetuities, and build an amortization schedule
  • Evaluate investments with NPV and IRR — and know when IRR misleads
  • Compare competing projects with NPV profiles, payback and the profitability index
  • Value cash flows on real calendar dates with XNPV and XIRR

Designed for: Finance and business students, career changers, and anyone preparing for analyst roles.

Time Value of Money Essentials

Module 1 · Interest and growth

  1. Future value and compound interestHow money grows when interest earns interest — and how to model it year by year.15 minFree
  2. Present value and discountingTurn future amounts into today's money — the core move behind every valuation.14 minFree
  3. Nominal and effective interest ratesCompare offers that compound at different frequencies on a like-for-like basis.12 minMembers
  4. Valuing uneven cash flowsValue irregular cash-flow streams one flow at a time, and solve for the payment that closes a gap.16 minFree

Module 2 · Annuities and loans

  1. Annuities and perpetuitiesValue level payment streams with formulas and with PV() and FV().17 minMembers
  2. Growing annuities and perpetuitiesValue payments that rise at a constant rate — rents, salaries, dividends — and prove the formula with a schedule.18 minMembers
  3. Loan payments and amortizationCalculate installments and build the schedule that splits each payment into interest and principal.16 minMembers
  4. Comparing loan offersCut through headline rates: turn fees, flat rates and different terms into one comparable number, the effective annual cost of borrowing.24 minMembers
  5. Planning to a savings goalTurn a goal into a plan: solve for the monthly saving, the time needed or the return required, and set the target in today's riyals.22 minMembers

Module 3 · Investment decisions

  1. Net present value (NPV)Decide whether a project creates value — and avoid the most common spreadsheet NPV mistake.18 minFree
  2. Internal rate of return (IRR)Find a project's break-even rate, and learn when IRR gives the wrong answer.18 minMembers
  3. Payback and profitability indexHow long until you get your money back, how much value per unit invested — and what each measure hides.18 minMembers
  4. NPV profiles and the crossover rateSee how NPV changes with the discount rate, and find the rate at which two competing projects swap places.20 minMembers
  5. Dated cash flows: XNPV and XIRRValue cash flows that land on real calendar dates, and know exactly what XNPV and XIRR assume.20 minMembers