2
Quantitative MethodsModule 2 of 11

Time Value of Money in Finance

7

Concepts

7

Formulas

2

Decisions

6

Quiz Questions

Explore the Learning Dashboard

Go to the CFA Level 1 Quantitative Methods hub

Key Concepts

7 concepts covered in this module.

Present Value (PV)

The current worth of a future cash flow discounted at the appropriate rate. Foundation of all valuation.

Future Value (FV)

The value of a current amount after earning interest over a specified period.

Study dashboard+5 more concepts

The complete set of concepts for this module lives in the study dashboard, alongside flashcards, quizzes, mind maps and progress tracking.

Open in Dashboard

Formulas

7 essential formulas for this module.

Future Value

FV = PV × (1 + r)n

Where: r = interest rate per period, n = number of periods

Present Value

PV = FV / (1 + r)n

Where: r = discount rate, n = periods

Study dashboard+5 more formulas

The complete set of formulas for this module lives in the study dashboard, alongside flashcards, quizzes, mind maps and progress tracking.

Open in Dashboard

Decision Frameworks

2 decision frameworks to guide your analysis.

Ordinary Annuity vs Annuity Due?

  • Ordinary annuity: most bonds (coupons at end of period), most loans
  • Annuity due: lease payments at start, insurance premiums
Study dashboard+1 more decision framework

The complete set of decision frameworks for this module lives in the study dashboard, alongside flashcards, quizzes, mind maps and progress tracking.

Open in Dashboard

Mind Map

Visual overview of how concepts connect in this module.

See the full mind map in the study dashboard

The interactive mind map for this module lives in the study dashboard, alongside flashcards, quizzes and progress tracking.

Open in Dashboard
Practice This Topic

Don't just read Time Value of Money in Finance — practice it

Try 5 sample flashcards and one quiz question here for free. This module's full flashcard deck and quiz live on the study dashboard.

  • 16 interactive flashcards built from this page
  • 6 exam-style quiz questions with instant scoring
  • Progress tracking across all 11 Quantitative Methods modules
Open This Module in the Dashboard

No signup needed to look around. Create a free account to save your progress.

Try it right here

Flashcard

Present Value (PV)

Tap to reveal the answer

Answer
The current worth of a future cash flow discounted at the appropriate rate. Foundation of all valuation.
Sample 1 of 5
Study all 16 flashcards in the dashboard

Previous Module

Rates and Returns

Next Module

Statistical Measures of Asset Returns