Many consumers don’t understand why or how interest rates work over time. In Consumer Economics, author Deji Badiru provides a concise guide to a better understanding of the time value of money based on the compounding effect of interest rates—the idea that time is a critical element in accumulating future values from a present cash flow value.
Badiru helps consumers understand the underpinning theories and principles of different loan scenarios and cash flow profiles. He covers cash flow diagrams, present value, future value, simple and compound interest rates, annual percentage rate, annuity, compounding of interest, capitalized cost, perpetual cash flow, rule of seventy-two, payback period, benefit-cost ratio, mortgage loan analysis, and equity breakeven point.
Consumer Economics offers the layperson important and useful information about interest rates, how to calculate their effect, and how to use this knowledge to their advantage. It communicates the importance of placing one’s money in interest-bearing bank accounts or other investment vehicles to get the most from one’s money.