CHAPTER 1

PERSONAL FINANCE BASICS & THE TIME VALUE OF MONEY

Key Concepts:

Analyze apersonal financial statement.

Identify opportunity cost.

Measure the time value of money.

Compute the present value of a lump sum and anannuity.

Compute the future value of a lump sum andan annuity.

Explain compounding and discounting

Personal Financial Planning is the process of managing your money to achieve personal economic satisfaction.

The planning process allows you to control your financial situation.

A comprehensive financial plan can enhance the quality of your life and increase your satisfaction by reducing uncertainty about future needs and resources.

ADVANTAGES

Increased effectiveness in obtaining, using, and protecting your financial resources throughout your lifetime.

Increased...