Suggested Money Lesson Plan
for this Worksheet
Ask the students what is the meaning of the
following picture:
(Time = Money)
Why does time equal money?
Time Value of Money (TVM) If you have a dollar today, it is worth more
than having a dollar next year. This concept is also known as the Time
Value of Money. The Time Value of money means that if you have a
dollar today, you can spend or invest it, so it is worth more than having a
dollar in one year from now.
For example, if you have $100 and invest it,
and the bank pays 5% interest, then in one year you will have an
extra $5.00 interest, or $105 in total. Therefore, $100 is worth more in
the future. In this example, the Future Value of $100 today is $105.
Related to Future Value is the concept of
Present Value. Present Value is the current value of money you will
receive in the future. In this example, the Present Value of the
$105 you will receive next year is $100. In other words, $100 today is
worth $105 in a year.
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