Although the time value of money is arguably the most important thing we should learn to price stocks and bonds, it is often misunderstood until the second or third finance class.  It really is that difficult but it can be confusing.  I have provided some of my own notes for the time value of money.  I have also given them in a MS-Word format time value of money in a MS-Word format as well as    and how to price stocks and bonds using DCF.  I realize that many of you know this material but I thought it might be a nice refresher.  In response to a student who I happened to run into on the way to class (he will remain nameless), I have included a case on the costs of smoking.   It dramatically UNDERSTATES the true cost as it does not include the insurance costs, but at least gets people thinking about how important it is to save money now and how a little a day adds up.

For a nice and easy comparision of simple vs. compound interest click here.

Still curious?  Learn how the various market indicies are actually computed.

You may also want to look at he notes on Retirement Planning as well as notes on the pricing of stocks and bonds.