A New Method for Teaching the Time Value of Money

Students frequently experience difficulty in identifying the appropriate time value of money (TVM) technique to apply to a problem. This paper surveys the TVM presentation in seven popular introductory finance textbooks. A new presentation technique is then developed. The presentation technique is based on a simple method for identifying the appropriate TVM technique to apply to any problem. TVM techniques conducive to applying the calculations in a generalized setting are then presented. Visual aids are provided to assist students in selecting correct techniques. By using these techniques students are able to more easily identify appropriate TVM techniques