Time Value of Money (TVM) and Financial Calculations

Test 1 Performance: Class average was slightly over $79$ . All students can still achieve a 'B', and most can still achieve an 'A', depending on future performance.
Question Patterns: Many students recognized questions from in-class reviews and PowerPoints, sometimes word-for-word. This pattern will decrease in subsequent tests as content becomes more complex.
Test 2 Expectations: Test 2 is expected to be harder, and average scores may be lower. However, students who struggled on Test 1 often improve, while those who did well sometimes see a decline if they become complacent.
Resources:
- Tutor information is available in the file section.
- An updated syllabus (effective from November $10$ onwards) will be posted in the file section, adjusting dates for Monday/Wednesday classes due to a holiday.
Communication: The instructor is responsive to questions via email, reflection entries, or after class. Tutors are also available.

Importance: This chapter is foundational and crucial for understanding future financial concepts like future value (FV), present value (PV), and time value of money.
Challenge: The material may be extensive and require focus. Students must ask questions and utilize tutoring if they encounter difficulties.

Current Statistics: The median 401k balance for individuals aged $35$ to $44$ was $35,005.37$ as of last November, which is insufficient for retirement.
Retirement Confidence: Most individuals lack confidence in their retirement prospects, a trend expected to continue for younger generations.
Social Security Concerns:
- Declining Worker Support: The number of workers supporting each Social Security retiree has significantly decreased from $5$ in $1960$ to $2.8$ in $2022$ .
- Financial Deficit: Since $2010$ , Social Security has paid out more than it collected. In $2023$ , $1.379$ trillion was paid out versus $1.233$ trillion collected, representing $21\%$ of the federal budget. This deficit is projected to worsen.
- Future Projections: By $2050$ , the worker-to-retiree ratio is projected to be $2:1$ . Without policy changes, future retirees may have minimal or no Social Security benefits.
Rule of Thumb: Plan early for retirement. Even small, consistent savings (e.g., $5$ a day) compounded over many years can make a substantial difference.

Timelines: Visual tools illustrating cash flows over time.
Present Value (PV): The current value of a future sum of money or stream of cash flows given a specified rate of return. Represented as PV.
Future Value (FV): The value of an asset or cash at a specified date in the future, based on its present value and an assumed rate of growth over time. Represented as FV.
Rate of Interest: The percentage return on an investment over a period.
Compounding: The process where an asset's earnings (interest) are reinvested to generate additional earnings over time. Interest is applied not only to the initial principal but also to the accumulated interest from previous periods.
- Example: $5\%$ interest on $100$ yields $5$ in year 1. In year 2, $5\%$ is calculated on $105$ , not just the original 100$.$

Dual Approach: It is highly recommended to learn how to perform calculations using both Excel and a financial calculator (or app) to provide a backup method during tests.
Excel Specifics:
- Interest Rate: Enter as a decimal (e.g., 5\% = 0.05).
- Number of Periods: Abbreviated as NPER.
- Beginning/End Payments: For payments at the end of the period, leave blank or enter 0 $. For payments at the <em>beginning</em> of the period, enter$ 1$$.
- Function Access: Use the FX button, navigate to the