The time value of money - German Nande

The video explores the concept of the time value of money through the stories of Sheila and Timmy. Sheila receives a bonus and decides to deposit it to earn interest, understanding the future value of money. Timmy, on the other hand, learns about compounding interest and how it affects his ability to purchase a car over time. The video explains the relationship between present and future value, the role of interest rates, and how the period of investment impacts financial outcomes.

What does Sheila decide to do with her bonus to eventually afford the car?

• Spend it on a vacation

• Invest in stocks

• Buy the car immediately

• Deposit the money to earn interest

What is the term used to describe the money Sheila deposits today?

• Future value

• Time value

• Present value

• Interest rate

What does Timmy need to do to increase the future value of his money?

• Invest in real estate

• Spend it immediately

• Deposit for more years

• Withdraw the money

How does the future value of money change with an increase in the period?

• It becomes zero

• It increases

• It remains the same

• It decreases

How many years does Timmy need to wait to afford the car?

• 15 years

• 10 years

• 5 years

• 26 years