Week 1
Ch3: .3 and .4, Ch4, Ch6: .1.3, Ch7: .1.4
3.3  The Time Value of Money and Interest Rates
The Time Value of Money
 the difference in value between money today and money
in the future
The Interest Rate: Converting Cash across Time

interest rate,
r,
for a given period as the interest rate at which money can be
borrowed or lent over that period

We refer to
(1+r)
as the i
nterest rate factor
for cash flows; it defines how we
convert cash flows across time, and has units of "$ in one year/$1 today."

FV = value after 1 period