Time Value Of Money

This is from an earlier version of the course. A quiz like this was handed out every day until you passed. It is a drill and kill approach but it works. Be sure to look at the links to the past quizzes and the videos at the bottom of the page.

The biggest hint that can be given is just to do a lot of these. If you can't find enough examples in the wiki, or in the book, or in the Schaums, make up examples for yourself in a spreadsheet similar to this one. You should be able to write down the example in factor notation and calculate the present worth from the factor notation. If you get the same number as the brute force method in the spreadsheet, you did it right.

# Reading the Gloss

On the right hand side of the quiz sheet you will see items in bold. These represent the most common problems people make.

## Not Factor Note

This means you are not showing things in factor notation. This usually means there is a fundamental misunderstanding about the notation, such as writing something like (P|7,.1,N). You need to review basic factor notation before you move on. Start with A Graphical and Symbolic Notation.

## Off By One

This means you don't have a problem with the notation but that you are having trouble with time shifting. The most common cause is not remembering the "One for the Pot" rule on the linear gradient. The other possibility is that you need to review the counting rule in time shifting, "The N and the Exponent sum to the last period with a non-zero value"

## Brute Force

This means you tried to represent the cash flow as a bunch of singletons. While mathematically correct, it avoids the point of this exercise, showing that you can use factor notation. You can usually represent these problems with the sum of a between two and four of the common patterns.

# Suggestions for how to pass

The best way to study is to kill trees. Go to the videos below and work your way through by starting a video and then stopping it. Take a look at the problem and then try to work out an answer. After you have created your answer, start up the video and find out what you did wrong. You should have it down pat in under two hours.

You need to get two of the three questions right to pass. A surprising number of students can't get the final question right, which is just an opportunity to use the present worth function on your calculator. For a longer version of how to check your other answers with the last one look here.

# Examples

There is a repository of past examples in the shared folder
Keys of Past Essential Questions. You may also want to look at the youtube videos of me explaining the answers in this youtube playlist. The key to using the videos is to start a video. Pause it. Write down what you think the answer should be and then unpause the video and find out where you went wrong. If you do that for an hour or two, you should have no problems with factor notation.

page revision: 20, last edited: 17 Jun 2016 17:57