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Time Value of Money (TVM): A Primer

• 16 Jun 2022

Would you rather receive $1,000 today or the promise that you’ll receive it one year from now? At first glance, this may seem like a trick question; in both instances, you receive the same amount of money.

Yet, if you answered the former, you made the correct choice. Why does receiving $1,000 now provide more value than in the future?

This concept is called the time value of money (TVM), and it’s central to financial accounting and business decision-making. Here’s a primer on what TVM is, how to calculate it, and why it matters.

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What Is the Time Value of Money?

The time value of money (TVM) is a core financial principle that states a sum of money is worth more now than in the future.

In the online course Financial Accounting , Harvard Business School Professor V.G. Narayanan presents three reasons why this is true:

• Opportunity cost: Money you have today can be invested and accrue interest, increasing its value.
• Inflation: Your money may buy less in the future than it does today.
• Uncertainty: Something could happen to the money before you’re scheduled to receive it. Until you have it, it’s not a given.

Essentially, a sum of money’s value depends on how long you must wait to use it; the sooner you can use it, the more valuable it is.

When time is the only differentiating factor, the money you receive sooner will always be more valuable. Yet, sometimes, there are other factors at play. For instance, what’s more valuable: $1,000 today or $2,000 one year from now?

TVM calculations “translate” all future cash to its present value. This way, you can directly compare its values and make financially informed decisions.

“Cash flows expressed in different time periods are analogous to cash flows expressed in different currencies,” Narayanan says in Financial Accounting. “To add or subtract cash flows of different currencies, we first have to convert them to the same currency. Likewise, cash flows of different time periods can be added and subtracted only if we convert them first into the same period.”

Related: 8 Financial Accounting Skills for Business Success

How to Calculate TVM

How you calculate TVM depends on which value you have and which you want to solve for. If you know the money’s present value (for instance, the amount you deposited into your savings account today), you can use the following formula to find its future value after accruing interest:

FV = PV x [ 1 + (i / n) ] (n x t)

Alternatively, if you know the money’s future value (for instance, a sum that’s expected three years from now), you can use the following version of the formula to solve for its present value:

PV = FV / [ 1 + (i / n) ] (n x t)

In the TVM formula:

• FV = cash’s future value
• PV = cash’s present value
• i = interest rate (when calculating future value) or discount rate (when calculating present value)
• n = number of compounding periods per year
• t = number of years

Calculating TVM Manually: An Example

Imagine you’re a key decision-maker in your organization and two projects are proposed:

• Project A is predicted to bring in $2 million in one year.
• Project B is predicted to bring in $2 million in two years.

Before running the calculation, you know that the time value of money states the $2 million brought in by Project A is worth more than the $2 million brought in by Project B, simply because Project A’s earnings are predicted to happen sooner.

To prove it, here’s the calculation to compare the present value of both projects’ predicted earnings, using an assumed four percent discount rate:

PV = 2,000,000 / [ 1 + (.04 / 1) ] (1 x 1)

PV = 2,000,000 / [ 1 + .04 ] 1

PV = 2,000,000 / 1.04

PV = $1,923,076.92

PV = 2,000,000 / [ 1 + (.04 / 1) ] (1 x 2)

PV = 2,000,000 / [ 1 + .04 ] 2

PV = 2,000,000 / 1.04 2

PV = 2,000,000 / 1.0816

PV = $1,849,112.43

In this example, the present value of Project A’s returns is greater than Project B’s because Project A’s will be received one year sooner. In that year, you could invest the $2 million in other revenue-generating activities, put it into a savings account to accrue interest, or pay expenses without risk.

Now, imagine there’s a third project to consider: Project C, which is predicted to bring in $3 million in two years. This adds another variable into the mix: When sums of money aren’t the same, how much weight does timeliness carry?

PV = 3,000,000 / [ 1 + (.04 / 1) ] (1 x 2)

PV = 3,000,000 / [ 1 + .04 ] 2

PV = 3,000,000 / 1.04 2

PV = 3,000,000 / 1.0816

PV = $2,773,668.64

In this case, Project C’s present value is greater than Project A’s, despite Project C having a longer timeline. In this case, you’d be wise to choose Project C.

Calculating TVM in Excel

While the aforementioned example was calculated manually, you can use a formula in Microsoft Excel, Google Sheets, or other data processing software to calculate TVM. Use the following formula to calculate a future sum’s present value:

=PV(rate,nper,pmt,FV,type)

In this formula:

• Rate refers to the interest rate or discount rate for the period. This is “i” in the manual formula.
• Nper refers to the number of payment periods for a given cash flow. This is “t” in the manual formula.
• Pmt or FV refers to the payment or cash flow to be discounted. This is “FV” in the manual formula. You don’t need to include values for both pmt and FV.
• Type refers to when the payment is received. If it’s received at the beginning of the period, use 0. If it’s received at the end of the period, use 1.

It’s important to note that this formula assumes payments are equal over the total number of periods (nper).

Here’s the calculation for Project A’s present value using Excel:

Why Is TVM Important?

Even if you don’t need to use the TVM formula in your daily work, understanding it can help guide decisions about which projects or initiatives to pursue.

“Applying the concept of time value of money to projections of free cash flows provides us with a way of determining what the value of a specific project or business really is,” Narayanan says in Financial Accounting.

As in the previous examples, you can use the TVM formula to calculate predicted returns’ present values for multiple projects. Those present values can then be compared to determine which will provide the most value to your organization.

Additionally, investors use TVM to assess businesses’ present values based on projected future returns, which helps them decide which investment opportunities to prioritize and pursue. If you’re an entrepreneur seeking venture capital funding, keep this in mind. The quicker you provide returns to investors, the higher cash’s present value, and the higher the likelihood they’ll choose to invest in your company over others.

You now know the basics of TVM and can use it to make financially informed decisions. If this piqued your interest, consider taking an online course like Financial Accounting to build your skills and learn more about TVM and other financial levers that impact an organization’s financial health .

Do you want to take your career to the next level? Explore Financial Accounting —one of three online courses comprising our Credential of Readiness (CORe) program —which can teach you the key financial topics you need to understand business performance and potential. Not sure which course is right for you? Download our free flowchart .

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Time Value of Money: A Home Investment Decision Dilemma

By: Arit Chaudhury, Varun Dawar, Rakesh Arrawatia

In early 2016, Naresh Jain was busy looking at various rental properties on popular real estate listing websites. Because of a sudden downturn in business conditions and an immediate need for money,…

• Length: 4 page(s)
• Publication Date: Jul 26, 2017
• Discipline: Finance
• Product #: W17453-PDF-ENG

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In early 2016, Naresh Jain was busy looking at various rental properties on popular real estate listing websites. Because of a sudden downturn in business conditions and an immediate need for money, Jain's landlord wanted to sell the property and therefore had asked Jain to vacate the premises within 30 days. Jain had been living in the spacious, two-bedroom apartment in North West Delhi for the past five years as it was within a reasonable commuting distance to his workplace. After looking at various rental properties, Jain had come across a furnished apartment identical to his, next door, and met with a broker to discuss it. During the discussion, it came up that an identical apartment in an adjoining locality was for sale at ₹12.5 million. Jain was thus faced with a quantitative finance decision of buy versus rent to arrive at the right option for him given his current financial conditions and the potential future benefits.

The authors Arit Chaudhury and Varun Dawar are affiliated with Institute of Management Technology, Ghaziabad.

Learning Objectives

This case can be used in a corporate finance or financial management course in an undergraduate or MBA program. The case illustrates practical usage of the time value of money concept and techniques to quantitatively evaluate the classic decision of buying versus renting a home. After working through the case and assignment questions, students will be able to do the following: Understand the practical concepts and techniques of the time value of money. Understand the present and future value estimation framework. Estimate relevant cash flows, including equated monthly installments, after taking into account taxation and opportunity cost considerations. Perform quantitative evaluation, using the time value of money framework, for the proposed alternatives of buying versus renting.

Jul 26, 2017

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W17453-PDF-ENG

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Dr. Kevin Bracker; Dr. Fang Lin; and jpursley

Compound interest is the eighth wonder of the world. He who understands it, earns it … he who doesn’t … pays it. – Albert Einstein

Chapter Learning Objectives

After completing this chapter, students should be able to

• Explain the concepts of future value, present value, annuities, and discount rates
• Solve for the future value, present value, payment, interest rate or number of periods using the 5-key approach on a financial calculator
• Work with annual, semi-annual, quarterly, monthly, biweekly, weekly, or daily periods
• Solve for the present value of a perpetuity
• Solve for the present value or future value of an uneven cash flow stream
• Solve for the interest rate implied by an uneven cash flow stream
• Explain, calculate, and compare investments based on the effective annual rate
• Perform complex time value of money calculations (problems where multiple steps are required in order to reach the final solution)

The Power of Compound Interest

The quote at the start of the chapter is often attributed to Albert Einstein (despite some controversy as to the accuracy of that attribution). However, the validity of the statement itself has merit. Positive returns on investments over long periods of time are central to making money work for you as the power of compounding allows for geometric growth. Consider the following table (before long, you’ll be able to verify these calculations) of someone saving $250 per month for various times at various rates of return. Note that an individual who is 25 would have about 40 years until a standard retirement at age 65 and, assuming their employer offers a 50% match on retirement savings plans such as a 401(k), a total contribution of $250 each month would only be $2000 per year out of pocket before taxes.

Table: Future Value of $250 per month investment

Take a moment to review the table above. Note that at 5 years out, the rate of return makes some difference, but not a dramatic difference. By 15 years out, an individual would have 2.5 times as much at the 15% rate of return as the 5% rate of return. By 30 years out, the 10% rate of return is 2.7 times as much as the 5% rate of return and the 15% rate of return has accumulated 8.3 times the wealth. By 40 years out, an individual has invested $120,000 into her retirement savings (40 years at $3000 per year – with the potential for some of that $120,000 coming from the employer). The power of compounding has generated about $261,500 at 5%, nearly $1.5 million at 10%, and over $7.5 million at 15%. This example illustrates how powerful time and return are as tools for building wealth. Now it is time to show you how to do these and other time value of money calculations.

Future Value

When you put your money in a savings account (or invest it in some fashion), you earn a certain return (sometimes called interest) in order to compensate you. Because of this, a dollar today is not worth the same amount as a dollar sometime in the future. Since you earn money on the dollar invested (or saved) today, you will have more than a dollar at some later future point (making a dollar today worth more than the same dollar received later). The specific amount that you will have at the future date is referred to as a Future Value.

Consider if you had $100 today and were able to earn 12% per year by putting that money in a savings account at XYZ bank. How much would you have in one year? Two years? Three years? At first, you might think that you would have $112 in one year, $124 in two years and $136 in three years as you would earn $12 per year in interest. However, this is WRONG! It ignores the concept of compounding. After one year, you would indeed have $112. However, during the second year you earn 12% interest on the full $112 instead of only the $100 you started with. Therefore, you will earn $13.44 (=112×0.12) in interest in the second year and have $125.44 in two years. During the third year, you will earn $15.05 (=125.44×0.12) in interest and have $140.49 in three years. Therefore, the Future Value of $100 for three years at 12% is $140.49. In other words, $100 today is equivalent to $140.49 received three years from now assuming that you can earn 12% interest annually.

Solving for Future Value

We have three ways to solve for the FV: formula, financial table, and financial calculator.

Method 1: Using a Formula to Find the FV

The first is directly with a formula. Under this method, we use the following formula:

[latex]FV=PV(1+k)^n[/latex]

FV is the future value (in year n) for which we are trying to solve PV is the present value (how much we have today) k is the rate of return we are earning (also referred to as the interest rate, required return, growth rate, or discount rate) n is the number of years which we will be saving (or investing) the money.

Method 2: Using a Table to Find the FV

The second method is to use Financial Tables, in Appendix A. Financial tables are cumbersome and don’t allow us as much flexibility as other methods, so they will not be covered in this text.

Method 3: Using a Financial Calculator to Find the FV

The third method (and the method focused on here) is to use the financial calculator or spreadsheet. Each financial calculator follows the same basic ideas, but the specifics are different for each brand of calculator. The steps below are for the HP10BII, TI-BAII+ and TI-83/84. If this is the first time using your financial calculator, see the detailed instructions  Setting up Your Financial Calculator , in Appendix B.   Please pause here to read that and set up your financial calculator before proceeding.

Calculator Steps to Compute FV:

Note: The order of steps 1-4 is not important. The FV answer will appear as a negative number, ignore the negative sign for now. For the TI-83/84 calculators your P/Y and C/Y on the onscreen display should both be 1 for now.

Example: Finding FV using the Financial Calculator

Find the Future Value of $350 invested for 25 years at 9.5% per year.

Step 1: 25 N Step 2: 9.5 I/YR Step 3: 350 PV Step 4: 0 PMT Step 5: FV⇒

You should get a solution of $3383.93.

In other words, if we invest $350 today and let it compound at 9.5% per year for 25 years, we will have $3383.93 at the end of the 25th year.

Technically, you will get a value of -3383.93. The negative sign is an important aspect of financial calculators. The calculator is looking for the solution that balances both parties of a transaction. Here, since the $350 starting value was positive, the calculator assumes that this amount is being received today. If an individual receives $350, that individual needs to pay back $3383.93. Positive values represent cash inflows and negative values represent cash outflows. In a problem like this, it is not essential. However, later in the chapter, we will introduce problems where the cash flow direction is essential. Specifically, whenever there are nonzero values for two or three of the cash flows (PV, PMT, and/or FV), cash flow direction matters. In those cases, figure out if the cash flow is coming to you (available at that moment to spend) or the cash flow is going away from you (set aside into a savings plan). If the cash flow is coming to you, it is positive. If it is going away from you, it is negative. If we applied that logic in this example, the $350 PV would actually be -350. However, this would not change the value of the FV other than to make it positive.

Present Value

The flip side of Future Value is Present Value. Future value tells us how much a certain amount of money will be worth at some future date assuming a certain rate of return. However, what if we know how much we are supposed to get at some point in the future and want to know what it is worth to us today? Now we must find the Present Value. Assume we are offered an opportunity to receive $200 at the end of two years (call it investment A). How much is this opportunity worth to us today assuming we could earn 8% by placing our money in a savings account (that has risk similar to investment A)? To answer this, we must ask how much we would need to place in a savings account today in order to have $200 at the end of the two years.

[latex]FV=PV(1+k)^n[/latex] [latex]200=PV(1.08)^2[/latex] [latex]\frac{200}{(1.08)^2}=PV[/latex] [latex]\$171.47=PV[/latex]

If we had $171.47 today and placed it in a savings account earning 8%, we would have $200 in two years (the same as through investment A). Assuming that investment A had the same degree of risk as our savings account, then we would buy investment A if it was available for less than $171.47 and put our money in the savings account if investment A cost more than $171.47. We could say that the present value of investment A is $171.47.

Solving for Present Value

We have three ways to solve for the PV: formula, financial table, and financial calculator.

Method 1: Using a Formula to Find the PV

[latex]PV=\frac{FV}{(1+k)^n}[/latex]

FV is the future value (in year n) that we plan to receive PV is the present value (how much it is worth to us today) k is the rate of return we can earn elsewhere (also referred to as the compound rate, required return, or discount rate) n is the number of years which we will have to wait before receiving the money.

Method 2: Using a Table to Find the PV

The second method is to use financial tables and will not be covered in this text.

Method 3: Using a Financial Calculator to Find the PV

The third method is to use the financial calculator (or spreadsheet). Each financial calculator follows the same basic ideas, but the specifics are different for each brand of calculator. The steps below are for the HP10BII, TI-BAII+ and TI-83/84.

Calculator Steps to Compute PV

Note: The order of steps 1-4 is not important. The PV answer will appear as a negative number, ignore the negative sign for now.

Example: Finding PV using the Financial Calculator

Find the Present Value of $5000 received 15 years from today with a 9.5% discount rate.

Step 1: 15 N Step 2: 9.5 I/YR Step 3: 0 PMT Step 4: 5000 FV Step 5: PV⇒

You should get a solution of $1281.62

In other words, if we are offered the opportunity to receive $5000 at the end of 15 years that is equivalent to receiving $1281.62 today.

The examples previously discussed are for situations where we have a specific amount today and want to know what it is worth at some point in the future (FV) or when we plan to receive a certain amount at some point in the future and want to know what it is worth today (PV). These are referred to as lump sum situations because there is only one cash flow that we are discounting or compounding.

Timelines: Let us pause here for a moment to introduce an important tool used in time value of money – timelines. Timelines provide an aid that helps us better visualize what the cash flow stream looks like. Consider an annuity that pays $2000 per year for 4 years with an 8% discount rate. We can illustrate this on a timeline as follows:

Note that the hashmarks represent the end of the time increment and the space between the hashmarks represent the time increment itself. In other words, the year 1 hashmark represents the end of year 1 where the annuity makes its first $2000 payment. Some students find timelines very helpful and use them for most time value of money problems while others use them less frequently. However, when we get to the section on complex time value of money problems later in this chapter, most students will find timelines quite beneficial.

Solving for Present Value of an Annuity

We have three ways to solve for the PV of an annuity: formula, financial table, and financial calculator.

Method 1: Using a Formula to Find the PV of an Annuity

[latex]PVA=PMT\Big(\frac{1-\frac{1}{(1+k)^n}}{k}\Big)[/latex]

PVA is the present value of the anticipated cash flow stream (annuity) PMT is the annuity payment (how much we receive or save each period) k is the rate of return we can earn elsewhere (also referred to as the compound rate, required return, or discount rate) n is the number of periods which we will have to wait before receiving the money.

Method 2: Using a Table to Find the PV of an Annuity

Method 3: using a financial calculator to find the pv of an annuity.

The third method is to use the financial calculator (or spreadsheet) which is what we will focus on. Let’s walk through an example with the financial calculator. An investment that pays $100 at the end of each year for 4 years is an annuity (note that a clue for annuities is to look for the word “each’ or “every” to indicate that the same cash flow is being repeated multiple times). If we wanted to know what that investment is worth to us today and we had a 10% discount rate, we would be finding the present value of that annuity.

Calculator Steps to Compute PV of an Annuity

You should get a solution of $316.99

Solving for Future Value of an Annuity

As with the other TVM calculations we have encountered, there are 3 basic methods to solve for the FV of an annuity: formula, financial table, and financial calculator.

Method 1: Using a Formula to Find the FV of an Annuity

[latex]FVA=PMT\Big(\frac{(1+k)^n-1}{k}\Big)[/latex]

FVA is the future value that our cash flow stream will grow to at the end of n periods PMT is the annuity payment (how much we receive or save each period) k is the rate of return we can earn elsewhere (also referred to as the compound rate, required return, or discount rate) n is the number of periods which we will have to wait before receiving the money.

Method 2: Using a Table to Find the FV of an Annuity

The second method is to use financial tables . These tables are included in Appendix A and will not be covered in this text.

Method 3: Using a Financial Calculator to Find the FV of an Annuity

The third method is the financial calculator (or spreadsheet) approach. Let’s walk through an example using the financial calculator to solve for the future value of an annuity. We want to save $1000 per year (at the end of each year) for 10 years at 12%. How much will this be worth at the end of the 10th year?

Calculator Steps to Compute FV of an Annuity

Note: The order of steps 1-4 is not important. The FV answer will appear as a negative number, ignore the negative sign for now.

You should get a solution of $17,548.74

Note: Ordinary annuities (both present value and future value) assume that cash flows will arrive at the end of each period. Occasionally, you might encounter an annuity due (which means that cash flows arrive at the BEGINNING of each period). It is easy to adjust for this when using a financial calculator by changing the calculator from END of period cash flows to BEGINNING of period cash flows. This process is described in Setting up Your Financial Calculator  in Appendix B (for the TI-83/84, it is just part of the onscreen display in the TVM_Solver).

Solving for PMT, I/YR, or N

Sometimes you may need to find something other than the present value or future value. For instance, you may want to know how much you have to save per year to reach a certain future value (or how much you must earn as a rate of return or how many years it will take). If you are using a financial calculator, these are relatively easy. For example, assume you have $2000 saved already and want to save another $5000 per year to accumulate $80,000 after 10 years. What rate of return must you earn?

Calculator Steps for the Solution

Solution = 8.83%

Reminder: Either the PMT must be negative and the FV positive or the PMT positive and the FV negative. It doesn’t matter which way you do it, but one must be negative and the other positive.

Solving for N and PMT is done along similar lines.

Perpetuities

A Perpetuity is an annuity that lasts forever. While it is difficult to imagine a situation where an individual could buy a cash flow stream that will pay a fixed amount per year through infinity, perpetuities can be useful tools when dealing with long, constant cash flow streams. Consider someone wanting to fund a scholarship or plan for retirement where she is not sure how long she’ll live. A perpetuity can provide a reasonable approximation in either of those situations.

How much would a perpetuity of $100 be worth assuming a discount rate of 10%? Remember this is $100 per year forever. It would seem that this would be worth an infinite amount. However, consider what would happen if you had $1000 today and could put it in the bank to earn 10% interest. You would receive $100 per year and never touch the principal. You would essentially be buying a $100 perpetuity (assuming the bank didn’t change the interest rate). Therefore, a perpetuity has a finite value. The formula for finding the present value of a perpetuity is as follows:

[latex]PV=\frac{PMT}{k}[/latex]

Note: When using this formula, always plug in k as a decimal so that 10% is 0.10

Uneven Cash Flow Streams

Sometimes you will encounter a situation where you have more than one payment, but it is not the same each year. Remember that an annuity requires the payment to be the same each year. If you have multiple cash flows, but they are not the same, you have an uneven cash flow stream. In order to solve a problem like this, treat it as a series of single cash flows (or possibly a series of smaller annuities).

Net Present Value of an Uneven Cash Flow Stream

Consider the following example: you have an investment project that will pay the following cash flows:

Year 1 $1000 Year 2 $500 Year 3 $2000 Year 4 $2000

The discount rate is 15%. Find the Present Value.

Calculator Steps to Compute PV of an Uneven Cash Flow Stream

Solution $3706.18

Note for HP10BII+: The Nj key is used to tell the calculator the number of times that the same cash flow will be received consecutively. If the cash flow only occurs once (in a row) then we do not need to use the Nj key. However, when we have the same cash flow multiple times in a row (such as the $2000 for two years), we can use the Nj key to tell the calculator that this $2000 will occur in two consecutive years.

Note for TI-BAII+: The F screen that appears after you enter a cash flow and down arrow is used to tell the calculator the number of times we have that same cash flow consecutively. If the cash flow only occurs once (in a row) then we do not F screen and just down arrow past it. However, when we have the same cash flow multiple times in a row (such as the 2000 for two years), we use the F screen to tell this to the calculator. The calculator does not have a F screen after the initial cash flow, so we do not need the double down arrow after entering the initial CF.

The above calculator methods are referred to as your Cash Flow Register or Cash Flow Worksheet. It is essential that you always clear all/clear work before entering any cash flows. If you do not do this you will be adding cash flows to a previous problem instead of starting a new problem. The TI-83/84 does not utilize this type of register and does not need to be cleared.

Future Value of an Uneven Cash Flow Stream

The NPV function gives you the present value. You may alternatively want to know how much you will have at the END of the time period (solve for the future value). If this is the case, you start by solving for the NPV. Once you have that, use the 5-key approach to bring that present value forward to the end of the time horizon. For example, if we wanted to know what the above cash flow stream was worth at the END of the fourth year, we would start by solving for the NPV and get the same $3706.18 we calculated earlier. Then, we would go to our 5-key and solve for the future value as follows:

Step 1: 4 N Step 2: 15 I/YR Step 3: 3706.18 PV Step 4: 0 PMT Step 5: Solve for FV⇒ $6482.13

When calculating the PV of an uneven cash flow stream, it should always be less than the sum of the cash flows. When calculating the FV of an uneven cash flow stream, it should always be more than the sum of the cash flows. Also, many financial calculators allow you to solve directly for the future value of an uneven cash flow stream. To see if yours does this, consult your user manual or ask your instructor.

Finding the discount rate of an Uneven Cash Flow Stream

We can also find the discount rate (I/Y) if we have uneven cash flows. Consider the following example: We have an investment project that will pay the following cash flows:

Year 1 $1000 Year 2 $500 Year 3 $2000

If the present value of this investment is $3000, what is the discount rate?

Calculator Steps to Compute I/Y of an Uneven Cash Flow Stream

Solution 7.06%

Note for HP10BII+: The IRR/YR is not the same key as you used for the I/YR, but it serves a similar role — finding the discount rate (or rate of return) for a cash flow stream. The difference is that they I/YR key only works with single cash flows or annuities while the IRR/YR key works with uneven cash flows.

Note for TI-BAII+: The IRR is not the same key as you used for the I/Y, but it serves a similar role — finding the discount rate (or rate of return) for a cash flow stream. The difference is that the I/Y key only works with single cash flows or annuities while the IRR key works with uneven cash flows.

CF0 will always be negative when calculating IRR. If you end up with an error message when calculating the IRR, one of the first things you should do is make sure that your CF0 was a negative value.

Non-Annual Compounding

The more frequently interest is compounded, the greater the effective yield on our savings. Many banks use non-annual compounding periods (monthly, daily, etc). In order to make comparisons, we must find the effective annual yield. This tells us how much we are earning on an annual basis.

Using a Formula to Find the Effective Annual Yield

The formula for effective annual yield is as follows:

[latex]k_{eff}=\Big(1+\frac{k_{nom}}{m}\Big)^m-1[/latex]

k eff is the effective annual yield k nom is the nominal or stated yield m is the number of compounding periods per year

For example, what is the effective interest rate of 8% compounded daily?

[latex]k_{eff}=\Big(1+\frac{0.08}{365}\Big)^{365}-1[/latex]

Note: Be careful not to round when you take .08/365 or you will end up with significant error after compounding it 365 times.

Using a Calculator to Find the Effective Annual Yield

As an alternative, you could use your financial calculator to find the effective interest rate. Again, using 8% compounded daily.

Calculator Steps to Find the Effective Annual Yield

Solution 8.33%.

Note for HP-10BII+: You have changed your payments per year when doing this calculation. If you go back to another TVM problem, be sure to reset your payments per year to one.

Example: Solve a Problem Involving Non-Annual Compounding

We could also look at non-annual compounding with loans or investments. For example, consider a mortgage loan. You are borrowing $80,000 at an 8% rate with monthly payments for 30 years (note that non-annual annuities and lump sums work best with calculators), what is your monthly payment?

Step 1: Convert your calculator to monthly payments by entering 12 P/YR Step 2: -80000 PV Step 3: 8 I/YR Step 4: 360 N (30 years at 12 months per year) Step 5: 0 FV Step 6: PMT

Solution = $587.01 per month

Be VERY careful if you change your payments per year to change it back to 1 P/YR when you are done. Also, each calculator is slightly different in how it sets the periods per year. Be sure to review the Setting up Your Financial Calculator  in Appendix B for calculator specific instructions.

Return to Future Value Tables

Remember the table of future values that we used to start the chapter? We said that the value of $250 set aside every month for 40 years at 10% would be $1,581,019.90. We also suggested that by the end of this chapter, you would be able to do that calculation on your own. Well, now you can.

Step 1: Convert your calculator to monthly payments by entering 12 P/YR Step 2: 0 PV Step 3: 10 I/YR Step 4: 480 N (40 years at 12 months per year) Step 5: 250 PMT Step 6: FV

Solution = $1,581,019.90

Complex Time Value of Money Problems

Everything above this point completes your “Time Value of Money Toolbox.” All the examples to this point have been straight-forward situations. However, sometimes we have what we refer to as complex time value of money problems where there are multiple issues that need addressed within one problem. One of the most common examples of this would be a retirement problem where you have X dollars available today, want to be able to withdraw a certain cash flow stream at retirement throughout your retirement years and want to find out how much you need to save each month until retirement between now and the day you retire to achieve your goal. In order to solve a problem like this, you need to visualize (a time line is very helpful) what information you have and what you are missing (that you need to solve for). You will often need to break this down into multiple steps.

Example: Solve a Complex Time Value of Money Problem

Consider a situation where you are saving for retirement. You currently have $40,000 saved and would like to save an additional $75 per week for the next 30 years. You estimate that when you retire (30 years from today), you want to be able to withdraw $750 each week for the next 20 years and have $200,000 left over at the end of the 20-year retirement period. Assuming you earn 5% during retirement, what rate of return must you earn during the next 30 years to meet your goal?

One way to approach this is to start with a timeline. Note that each period is one week and there are 52 weeks per year. This means that we will have 1560 periods until retirement (1560 = 30×52) and another 1040 periods until the end of retirement (1040 = 20×52). This provides a total of 2600 periods for the entire 50 year time (2600 = 1560 + 1040). Once we’ve created the timeline, we can split it into two timelines. Timeline one will begin today and go to retirement (period 1560) and timeline 2 will begin at retirement (also period 1560) and go to the end of the retirement time frame (period 2600). Here, the timelines help us visualize the information that we know and what we need to find out (specifically our rate of return we must earn over the first 30 years).

Now we can start the calculations. To start, you need to figure out how much you will require at the end of the 30 years. This is the amount you want to have when you retire.

Step 1: Solve for how much you need at retirement.

Set your calculator to 52 periods per year to reflect weekly withdraws during retirement

Set your N to 1040 (52 periods per year for 20 years = 1040 weekly periods)

Set your PMT to 750 (to reflect the weekly withdraw)

Set your FV to 200,000 (to reflect the amount left over)

Set your I/YR to 5 (for your rate of return during retirement)

Solve for PV ⇒$566,527.38

Note – your PMT and FV need to be the same sign. You can make them both positive or both negative, but they are both flowing in the same direction so must be the same sign.

Step 2: Now that you know how much you need when you retire ($566,527.38), you can calculate what rate of return you need to earn over the next 30 years to get there.

Keep your calculator set to 52 periods per year as you are making weekly contributions

Set your N to 1560 (52 periods per year for 30 years = 1560 weekly periods)

Set your PV to -40,000 (to reflect the initial $40,000 contribution)

Set your PMT to -75 (to reflect your weekly $75 contribution)

Set your FV to 566,527.38 (to reflect how much you need at retirement)

Solve for I/YR ⇒5.98%

Note – your PV and PMT both need to be the same sign. Again, you can make them positive or negative, but they are both flowing in the same direction. The FV needs to be the opposite sign. The easiest way to think of this is that you are giving up the $40,000 today and the $75 per week in order to get back the $566,527.38 30 years from today.

Key Takeaways

Time value of money is one of the most powerful and most important concepts in finance. It essentially is as simple as recognizing that because we can earn a return on our money, the value of money changes depending on when it is received or spent. One dollar today is worth more than one dollar received next year. The value of the dollar initially is referred to as a present value while the value of the dollar at a later point in time is referred to as the future value. Compound interest implies that money will grow exponentially over time instead of linearly. This means that relatively small increases in rates of return or time horizons have more power to increase wealth. After completing this chapter, you should be comfortable performing many calculations to see exactly how time value of money can work for you.

Explain why $1 received today is worth more than $1 received one year from today.

What do we mean when we refer to an annuity? How is an annuity different from an annuity due?

What is the relationship between present value and future value?

How do we determine the appropriate discount rate to use when finding present value?

Why is compounding on a monthly basis better for us than compounding on an annual basis?

Determine the answer to each of the following questions.

1a. Find the Future Value of $2500 invested today at 11% for 10 years. 1b. Find the Future Value of $2500 invested today at 11% for 30 years. 1c. Find the Present Value of $6000 received 10 years from today if the discount rate is 5%. 1d. Find the Present Value of $6000 received 10 years from today if the discount rate is 10%. 1e. Find the Future Value of $3000 per year (at the end of each year) invested at 6% for 30 years. 1f. Find the Future Value of $3000 per year (at the end of each year) invested at 12% for 30 years. 1g. Find the Present Value of $4000 per year (at the end of each year) if the discount rate is 15% for 20 years. 1h. Find the Present Value of $4000 per year (at the end of each year) if the discount rate is 15% for 40 years.

Find the interest rates implied by each of the following:

2a. You borrow $1500 today and promise to repay the loan by making a single payment of $2114.00 in 5 years. 2b. You invest $500 today and receive a promise of receiving back $193.50 for each of the next 4 years.

If $2000 is invested today at a 12% nominal interest rate, how much will it be worth in 15 years if interest is compounded

3a. Annually 3b. Quarterly 3c. Monthly 3d. Daily (365-days per year)

How long will it take your money to triple given the following interest rates?

4a. 5% 4b. 10% 4c. 15%

After graduating from college you make it big — all because of your success in business finance. You decide to endow a scholarship for needy finance students that will provide $5000 per year indefinitely, beginning 1 year from now. How much must be deposited today to fund the scholarship under the following conditions.

5a. The interest rate is 10% 5b. The interest rate is 10% and the first payment is made 6 years from today instead of 1 year from today.

Find the present value of the following cash flow stream if the discount rate is 12%:

Years 1-10 $4000 per year Years 11-15 $6000 per year Years 16-20 $8000 per year

Find the value of the following cash flow stream at the end of year 30 if the rate of return is 8.75%:

Years 1-5 $3000 per year Year 6 $7500 Years 7-15 $9000 per year Years 16-30 $12,000 per year

Find the effective annual rate of interest for a nominal rate of 9% compounded

8a. Annually 8b. Quarterly 8c. Monthly 8d. Daily (365 days per year)

Your firm has a retirement plan that matches all contributions on a one-to-two basis. That is, if you contribute $3000 per year, the company will add $1500 to make it $4500. The firm guarantees a 9% return on your investment. Alternatively, you can “do-it-yourself” and you think you can earn 12% on your money by doing it this way. The first contribution will be made 1 year from today. At that time, and every year thereafter, you will put $3000 into the retirement account. If you want to retire in 25 years, which way are you better off?

Jen is planning for retirement. She plans to work for 32 more years. She currently has $15,000 saved and, for the next 15 years, she can save $6,000 at the end of each year. Fifteen years from now, she wants to buy a weekend vacation home that she estimates will require her to withdraw $100,000. How much will she have to save in years 16 through 32 so that she has exactly $750,000 saved when she retires? Assume she can earn 9% throughout the 32-year period.

You are a recent college graduate and want to start saving for retirement. You plan to save $2000 per year for the next 15 years. After that you will stop contributing and just allow your savings to accumulate for another 20 years. Your twin brother would rather wait awhile before he starts saving. He is not going to put away anything for the next ten years, then he will start making contributions at the end of each year for the final 25 years. You both anticipate earning a 9.5% rate of return on your investments. How much must your brother put away at the end of each year to have the same amount of money for retirement as you?

You are considering purchasing a new home. The house you are looking at costs $120,000 and you plan to make a 10% down payment. You checked with a bank and they have two mortgage loan options for you. The first is a 15-year mortgage at 6.25%. The second is a 30-year mortgage at 6.50%.

12a. What are your monthly payments for each loan? 12b. What is the total you will pay over the life of the loan for each loan? 12c. After one year you get a job transfer and have to sell the house. What is the payoff value of your remaining loan balance (hint: find PV of remaining payments)? 12d. Over the first year, how much did you pay in principal and how much did you pay in interest?

Solutions to CH 3 Exercises

Student resources.

Table: Future Value of $250 per month investment, in Appendix B

Financial Tables, in Appendix A

Setting up Your Financial Calculator, in Appendix B

TVM 5-Key Approach Guided Tutorial with HP10BII+, in Appendix B

TVM 5-Key Approach Guided Tutorial with TI-BAII+, in Appendix B

TVM 5-Key Approach Guided Tutorial with TI-83 or TI-84, in Appendix B

Attributions

Image: Mixed from  Godkänd Grön Handskrivning by  Anthony Poynton is licensed under CC0 1.0

Business Finance Essentials Copyright © 2018 by Dr. Kevin Bracker; Dr. Fang Lin; and jpursley is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License , except where otherwise noted.

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7.3 Methods for Solving Time Value of Money Problems

Learning outcomes.

By the end of this section, you will be able to:

• Explain how future dollar amounts are calculated.
• Explain how present dollar amounts are calculated.
• Describe how discount rates are calculated.
• Describe how growth rates are calculated.
• Illustrate how periods of time for specified growth are calculated.
• Use a financial calculator and Excel to solve TVM problems.

We can determine future value by using any of four methods: (1) mathematical equations, (2) calculators with financial functions, (3) spreadsheets, and (4) FVIF tables. With the advent and wide acceptance and use of financial calculators and spreadsheet software, FVIF (and other such time value of money tables and factors) have become obsolete, and we will not discuss them in this text. Nevertheless, they are often still published in other finance textbooks and are also available on the internet to use if you so choose.

Using Timelines to Organize TVM Information

A useful tool for conceptualizing present value and future value problems is a timeline. A timeline is a visual, linear representation of periods and cash flows over a set amount of time. Each timeline shows today at the left and a desired ending, or future point (maturity date), at the right.

Now, let us take an example of a future value problem that has a time frame of five years. Before we begin to solve for any answers, it would be a good approach to lay out a timeline like that shown in Table 7.1 :

The timeline provides a visual reference for us and puts the problem into perspective.

Now, let’s say that we are interested in knowing what today’s balance of $100 in our saving account, earning 5% annually, will be worth at the end of each of the next five years. Using the future value formula

that we covered earlier, we would arrive at the following values: $105 at the end of year one, $110.25 at the end of year two, $115.76 at the end of year three, $121.55 at the end of year four, and $127.63 at the end of year five.

With the numerical information, the timeline (at a 5% interest or growth rate) would look like Table 7.2 :

Using timelines to lay out TVM problems becomes more and more valuable as problems become more complex. You should get into the habit of using a timeline to set up these problems prior to using the equation, a calculator, or a spreadsheet to help minimize input errors. Now we will move on to the different methods available that will help you solve specific TVM problems. These are the financial calculator and the Excel spreadsheet.

Using a Financial Calculator to Solve TVM Problems

An extremely popular method of solving TVM problems is through the use of a financial calculator. Financial calculators such as the Texas Instruments BAII Plus™ Professional will typically have five keys that represent the critical variables used in most common TVM problems: N , I/Y , PV , FV , and PMT . These represent the following:

These are the only keys on a financial calculator that are necessary to solve TVM problems involving a single payment or lump sum .

Example 1: Future Value of a Single Payment or Lump Sum

Let’s start with a simple example that will provide you with most of the skills needed to perform TVM functions involving a single lump sum payment with a financial calculator.

Suppose that you have $1,000 and that you deposit this in a savings account earning 3% annually for a period of four years. You will naturally be interested in knowing how much money you will have in your account at the end of this four-year time period (assuming you make no other deposits and withdraw no cash).

To answer this question, you will need to work with factors of $1,000, the present value ( PV ); four periods or years, represented by N ; and the 3% interest rate, or I/Y . Make sure that the calculator register information is cleared, or you may end up with numbers from previous uses that will interfere with the solution. The register-clearing process will depend on what type of calculator you are using, but for the TI BA II Plus™ Professional calculator, clearing can be accomplished by pressing the keys 2ND and FV [ CLR TVM ].

Once you have cleared any old data, you can enter the values in the appropriate key areas: 4 for N , 3 for I/Y , and 1000 for PV . Now you have entered enough information to calculate the future value. Continue by pressing the CPT (compute) key, followed by the FV key. The answer you end up with should be displayed as 1,125.51 (see Table 7.3 ).

Important Notes for Using a Calculator and the Cash Flow Sign Convention

Please note that the PV was entered as negative $1,000 (or -$1000). This is because most financial calculators (and spreadsheets) follow something called the cash flow sign convention, which is a way for calculators and spreadsheets to keep the relative direction of the cash flow straight. Positive numbers are used to represent cash inflows, and negative numbers should always be used for cash outflows.

In this example, the $1,000 is an investment that requires a cash outflow. For this reason, -1000 is entered as the present value, as you will be essentially handing this $1,000 to a bank or to someone else to initiate the transaction. Conversely, the future value represents a cash inflow in four years’ time. This is why the calculator generates a positive 1,125.51 as the end result of this calculation.

Had you entered the present value of $1,000 as a positive number, there would have been no real concern, but the ending future value answer would have been returned expressed as a negative number. This would be correct had you borrowed $1,000 today (cash inflow) and agreed to repay $1,125.51 (cash outflow) four years from now. Also, it is important that you do not change the sign of any input value by using the - (minus) key). For example, on the TI BA II Plus™ Professional, you must use the +|- key instead of the minus key. If you enter 1000 and then hit the +|- key, you will get a negative 1,000 amount showing in the calculator display.

An important feature of most financial calculators is that it is possible to change any of the variables in a problem without needing to reenter all of the other data. For example, suppose that we wanted to find out the future value in our bank account if we left the money from our previous example invested for 20 years instead of 4. Before clearing any of the data, simply enter 20 for N and then press the CPT key and then the FV key. After this is done, all other inputs will remain the same, and you will arrive at an answer of $1,806.11.

Think It Through

How to determine future value when other variables are known.

Here’s an example of using a financial calculator to solve a common time value of money problem. You have $2,000 invested in a money market account that is expected to earn 4% annually. What will be the total value in the account after five years?

Follow the recommended financial calculator steps in Table 7.4 .

The result of this future value calculation of the invested money is $2,433.31.

Example 2: Present Value of Lump Sums

Solving for the present value (discounted value) of a lump sum is the exact opposite of solving for a future value. Once again, if we enter a negative value for the FV, then the calculated PV will be a positive amount.

Taking the reverse of what we did in our example of future value above, we can enter -1,125.51 for FV , 3 for I/Y , and 4 for N . Hit the CPT and PV keys in succession, and you should arrive at a displayed answer of 1,000.

An important constant within the time value of money framework is that the present value will always be less than the future value unless the interest rate is negative. It is important to keep this in mind because it can help you spot incorrect answers that may arise from errors with your input.

How to Determine Present Value When Other Variables Are Known

Here is another example of using a financial calculator to solve a common time value of money problem. You have just won a second-prize lottery jackpot that will pay a single total lump sum of $50,000 five years from now. How much value would this have in today’s dollars, assuming a 5% interest rate?

Follow the recommended financial calculator steps in Table 7.5 .

The present value of the lottery jackpot is $39,176.31.

Example 3: Calculating the Number of Periods

There will be times when you will know both the value of the money you have now and how much money you will need to have at some unknown point in the future. If you also know the interest rate your money will be earning for the foreseeable future, then you can solve for N, or the exact amount of time periods that it will take for the present value of your money to grow into the future value that you will require for your eventual use.

Now, suppose that you have $100 today and you would like to know how long it will take for you to be able to purchase a product that costs $133.82.

After making sure your calculator is clear, you will enter 5 for I/Y , -100 for PV , and 133.82 for FV . Now press CPT N , and you will see that it will take 5.97 years for your money to grow to the desired amount of $133.82.

Again, an important thing to note when using a financial calculator to solve TVM problems is that you must enter your numbers according to the cash flow sign convention discussed above. If you do not make either the PV or the FV a negative number (with the other being a positive number), then you will end up getting an error message on the screen instead of the answer to the problem. The reason for this is that if both numbers you enter for the PV and FV are positive, the calculator will operate under the assumption that you are receiving a financial benefit without making any cash outlay as an initial investment. If you get such an error message in your calculations, you can simply press the CE/C key. This will clear the error, and you can reenter your data correctly by changing the sign of either PV or FV (but not both of these, of course).

Determining Periods of Time

Here is an additional example of using a financial calculator to solve a common time value of money problem. You want to be able to contribute $25,000 to your child’s first year of college tuition and related expenses. You currently have $15,000 in a tuition savings account that is earning 6% interest every year. How long will it take for this account grow into the targeted amount of $25,000, assuming no additional deposits or withdrawals will be made?

Table 7.6 shows the steps you will take.

The result of this calculation is a time period of 8.7667 years for the account to reach the targeted amount.

Example 4: Solving for the Interest Rate

Solving for an interest rate is a common TVM problem that can be easily addressed with a financial calculator. Let’s return to our earlier example, but in this case, we know that we have $1,000 at the present time and that we will need to have a total of $1,125.51 four years from now. Let’s also say that the only way we can add to the current value of our savings is through interest income. We will not be able to make any further deposits in addition to our initial $1,000 account balance.

What interest rate should we be sure to get on our savings account in order to have a total savings account value of $1,125.51 four years from now?

Once again, clear the calculator, and then enter 4 for N , -1,000 for PV , and 1,125.51 for FV . Then, press the CPT and I/Y keys and you will find that you need to earn an average 3% interest per year in order to grow your savings balance to the desired amount of $1,125.51. Again, if you end up with an error message, you probably failed to follow the sign convention relating to cash inflow and outflow that we discussed earlier. To correct this, you will need to clear the calculator and reenter the information correctly.

After you believe you are done and have arrived at a final answer, always make sure you give it a quick review. You can ask yourself questions such as “Does this make any sense?” “How does this compare to other answers I have arrived at?” or “Is this logical based on everything I know about the scenario?” Knowing how to go about such a review will require you to understand the concepts you are attempting to apply and what you are trying to make the calculator do. Further, it is critical to understand the relationships among the different inputs and variables of the problem. If you do not fully understand these relationships, you may end up with an incorrect answer. In the end, it is important to realize that any calculator is simply a tool. It will only do what you direct it to do and has no idea what your objective is or what it is that you really wish to accomplish.

Determining Interest or Growth Rate

Here is another example of using a financial calculator to solve a common time value of money problem. Let’s use a similar example to the one we used when calculating periods of time to determine an interest or growth rate. You still want to help your child with their first year of college tuition and related expenses. You also still have a starting amount of $15,000, but you have not yet decided on a savings plan to use.

Instead, the information you now have is that your child is just under 10 years old and will begin college at age 18. For simplicity’s sake, let’s say that you have eight and a half years before you will need to meet your total savings target of $25,000. What rate of interest will you need to grow your saved money from $15,000 to $25,000 in this time period, again with no other deposits or withdrawals?

Follow the steps shown in Table 7.7 .

The result of this calculation is a necessary interest rate of 6.194%.

Using Excel to Solve TVM Problems

Excel spreadsheets can be excellent tools to use when solving time value of money problems. There are dozens of financial functions available in Excel, but a student who can use a few of these functions can solve almost any TVM problem. Special functions that relate to TVM calculations are as follows:

Excel also includes a function called Payment (PMT) that is used in calculations involving multiple payments or deposits (annuities). These will be covered in Time Value of Money II: Equal Multiple Payments .

Future Value (FV)

The Future Value function in Excel is also referred to as FV and can be used to calculate the value of a single lump sum amount carried to any point in the future. The FV function syntax is similar to that of the other four basic time-value functions and has the following inputs (referred to as arguments), similar to the functions listed above:

Lump sum problems do not involve payments, so the value of Pmt in such calculations is 0. Another argument, Type, refers to the timing of a payment and carries a default value of the end of the period, which is the most common timing (as opposed to the beginning of a period). This may be ignored in our current example, which means the default value of the end of the period will be used.

The spreadsheet in Figure 7.3 shows two examples of using the FV function in Excel to calculate the future value of $100 in five years at 5% interest.

In cell E1, the FV function references the values in cells B1 through B4 for each of the arguments. When a user begins to type a function into a spreadsheet, Excel provides helpful information in the form of on-screen tips showing the argument inputs that are required to complete the function. In our spreadsheet example, as the FV formula is being typed into cell E2, a banner showing the arguments necessary to complete the function appears directly below, hovering over cell E3.

Cells E1 and E2 show how the FV function appears in the spreadsheet as it is typed in with the required arguments. Cell E4 shows the calculated answer for cell E1 after hitting the enter key. Once the enter key is pressed, the hint banner hovering over cell E3 will disappear. The second example of the FV function in our example spreadsheet is in cell E6. Here, the actual numerical values are used in the FV function equation rather than cell references. The method in cell E8 is referred to as hard coding . In general, it is preferable to use the cell reference method, as this allows for copying formulas and provides the user with increased flexibility in accounting for changes to input data. This ability to accept cell references in formulas is one of the greatest strengths of Excel as a spreadsheet tool.

Download the spreadsheet file containing key Chapter 7 Excel exhibits.

Determining Future Value When Other Variables Are Known . You have $2,000 invested in a money market account that is expected to earn 4% annually. What will be the total value in the account in five years?

Note: Be sure to follow the sign conventions. In this case, the PV should be entered as a negative value.

Note: In Excel, interest and growth rates must be entered as percentages, not as whole integers. So, 4 percent must be entered as 4% or 0.04—not 4, as you would enter in a financial calculator.

Note: It is always assumed that if not specifically stated, the compounding period of any given interest rate is annual, or based on years.

Note: The Excel command used to calculate future value is as follows:

You may simply type the values for the arguments in the above formula. Another option is to use the Excel insert function option. If you decide on this second method, below are several screenshots of dialog boxes you will encounter and will be required to complete.

This dialog box allows you to either search for a function or select a function that has been used recently. In this example, you can search for FV by typing this in the search box and selecting Go, or you can simply choose FV from the list of most recently used functions (as shown here with the highlighted FV option).

Figure 7.6 shows the completed data input for the variables, referred to here as “function arguments.” Note that cell addresses are used in this example. This allows the spreadsheet to still be useful if you decide to change any of the variables. You may also type values directly into the Function Arguments dialog box, but if you do this and you have to change any of your inputs later, you will have to reenter the new information. Using cell addresses is always a preferable method of entering the function argument data.

Additional notes:

• The Pmt argument or variable can be ignored in this instance, or you can enter a placeholder value of zero. This example shows a blank or ignored entry, but either option may be used in problems such as this where the information is not relevant.
• The Type argument does not apply to this problem. Type refers to the timing of cash flows and is usually used in multiple payment or annuity problems to indicate whether payments or deposits are made at the beginning of periods or at the end. In single lump sum problems, this is not relevant information, and the Type argument box is left empty.
• When you use cell addresses as function argument inputs, the numerical values within the cells are displayed off to the right. This helps you ensure that you are identifying the correct cells in your function. The final answer generated by the function is also displayed for your preliminary review.

Once you are satisfied with the result, hit the OK button, and the dialog box will disappear, with only the final numerical result appearing in the cell where you have set up the function.

The FV of this present value has been calculated as approximately $2,433.31.

Present Value (PV)

We have covered the idea that present value is the opposite of future value. As an example, in the spreadsheet shown in Figure 7.3 , we calculated that the future value of $100 five years from now at a 5% interest rate would be $127.63. By reversing this process, we can safely state that $127.63 received five years from now with a 5% interest (or discount) rate would have a value of just $100 today. Thus, $100 is its present value. In Excel, the PV function is used to determine present value (see Figure 7.7 ).

The formula in cell E1 uses cell references in a similar fashion to our FV example spreadsheet above. Also similar to our earlier example is the hard-coded formula for this calculation, which is shown in cell E6. In both cases, the answers we arrive at using the PV function are identical, but once again, using cell references is preferred over hard coding if possible.

Determining Present Value When Other Variables Are Known

You have just won a second-prize lottery jackpot that will pay a single total lump sum of $50,000 five years from now. You are interested in knowing how much value this would have in today’s dollars, assuming a 5% interest rate.

• If you wish for the present value amount to be positive, the future value you enter here should be a negative value.
• In Excel, interest and growth rates must be entered as percentages, not as whole integers. So, 5 percent must be entered as 5% or 0.05—not 5, as you would enter in a financial calculator.
• It is always assumed that if not specifically stated, the compounding period of any given interest rate is annual, or based on years.
• The Excel command used to calculate present value is as shown here:

As with the FV formula covered in the first tab of this workbook, you may simply type the values for the arguments in the above formula. Another option is to again use the Insert Function option in Excel. Figure 7.8 , Figure 7.9 , and Figure 7.10 provide several screenshots that demonstrate the steps you’ll need to follow if you decide to enter the PV function from the Insert Function menu.

As discussed in the FV function example above, this dialog box allows you to either search for a function or select a function that has been used recently. In this example, you can search for PV by typing this into the search box and selecting Go, or you can simply choose PV from the list of the most recently used functions.

Figure 7.10 shows the completed data input for the function arguments. Note that once again, cell addresses are used in this example. This allows the spreadsheet to still be useful if you decide to change any of the variables. As in the FV function example, you may also type values directly in the Function Arguments dialog box, but if you do this and you have to change any of your input later, you will have to reenter the new information. Remember that using cell addresses is always a preferable method of entering the function argument data.

Again, similar to our FV function example, the Function Arguments dialog box shows values off to the right of the data entry area, including our final answer. The Pmt and Type boxes are again not relevant to this single lump sum example, for reasons we covered in the FV example.

Review your answer. Once you are satisfied with the result, click the OK button, and the dialog box will disappear, with only the final numerical result appearing in the cell where you have set up the function. The PV of this future value has been calculated as approximately $39,176.31.

Periods of Time

The following discussion will show you how to use Excel to determine the amount of time a given present value will need to grow into a specified future value when the interest or growth rate is known.

You want to be able to contribute $25,000 to your child’s first year of college tuition and related expenses. You currently have $15,000 in a tuition savings account that is earning 6% interest every year. How long will it take for this account grow into the targeted amount of $25,000, assuming no additional deposits or withdrawals are made?

• As with our other examples, interest and growth rates must be entered as percentages, not as whole integers. So, 6 percent must be entered as 6% or 0.06—not 6, as you would enter in a financial calculator.
• The present value needs to be entered as a negative value in accordance with the sign convention covered earlier.
• The Excel command used to calculate the amount of time, or number of periods, is this:

As with our FV and PV examples, you may simply type the values of the arguments in the above formula, or we can again use the Insert Function option in Excel. If you do so, you will need to work with the various dialog boxes after you select Insert Function.

As discussed in our previous examples on FV and PV, this menu allows you to either search for a function or select a function that has been used recently. In this example, you can search for NPER by typing this into the search box and selecting Go, or you can simply choose NPER from the list of most recently used functions.

• Once you have highlighted NPER, click the OK button, and a new dialog box will appear for you to enter the necessary details. As in our previous examples, it will look like Figure 7.12 .

Figure 7.13 shows the completed Function Arguments dialog box. Note that once again, we are using cell addresses in this example.

As in the previous function examples, values are shown off to the right of the data input area, and our final answer of approximately 8.77 is displayed at the bottom. Also, once again, the Pmt and Type boxes are not relevant to this single lump sum example.

Review your answer, and once you are satisfied with the result, click the OK button. The dialog box will disappear, with only the final numerical result appearing in the cell where you have set up the function.

The amount of time required for the desired growth to occur is calculated as approximately 8.77 years.

Interest or Growth Rate

You can also use Excel to determine the required growth rate when the present value, future value, and total number of required periods are known.

Let’s discuss a similar example to the one we used to calculate periods of time. You still want to help your child with their first year of college tuition and related expenses, and you still have a starting amount of $15,000, but you have not yet decided which savings plan to use.

Instead, the information you now have is that your child is just under 10 years old and will begin college at age 18. For simplicity’s sake, let’s say that you have eight and a half years until you will need to meet your total savings target of $25,000. What rate of interest will you need to grow your saved money from $15,000 to $25,000 in this time, again with no other deposits or withdrawals?

Note: The present value needs to be entered as a negative value.

Note: The Excel command used to calculate interest or growth rate is as follows:

As with our other TVM function examples, you may simply type the values for the arguments into the above formula. We also again have the same alternative to use the Insert Function option in Excel. If you choose this option, you will again see the Insert Function dialog box after you click the Insert Function button.

Once we complete the input, again using cell addresses for the required argument values, we will see what is shown in Figure 7.16 .

As in our other examples, cell values are shown as numerical values off to the right, and our answer of approximately 0.0619, or 6.19%, is shown at the bottom of the dialog box.

This answer also can be checked from a logic point of view because of the similar example we worked through when calculating periods of time. Our present value and future value are the same as in that example, and our time period is now 8.5 years, which is just under the result we arrived at (8.77 years) in the periods example.

So, if we are now working with a slightly shorter time frame for the savings to grow from $15,000 into $25,000, then we would expect to have a slightly greater growth rate. That is exactly how the answer turns out, as the calculated required interest rate of approximately 6.19% is just slightly greater than the growth rate of 6% used in the previous example. So, based on this, it looks like our answer here passes a simple “sanity check” review.

• 1 The specific financial calculator in these examples is the Texas Instruments BA II Plus™ Professional model, but you can use other financial calculators for these types of calculations.

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• How time value of money works 
• How to calculate time value of money 
• An example of using TVM
• The financial takeaway

Time value of money: The guiding principle for virtually every financial and investing decision

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• The time value of money (TVM) is the concept that a dollar today is worth more than a dollar tomorrow.
• Understanding TVM allows you to evaluate financial opportunities and risks.
• The principle underlies almost every financial and investing decision you make.

The time value of money (TVM) is the concept that the money you have in your pocket today is worth more than the same amount would be if you received it in the future because of the profit it can earn during the interim. For example, let's say you can either receive a $100,000 payout today or $10,000 per year for the next ten years totalling $100,000. Ignoring taxes, the $100,000 payout today is worth more, according to the TVM principle, because you can put your money to work. For example, you can invest in stocks, buy real estate, or put it in a certificate of deposit (CD) .

Understanding the time value of money can help you in making decisions ranging from which job has better salary terms, what's a good rate for a loan, or if the investment you're considering has good growth potential.

How time value of money works 

The time value of money is an important concept to keep in mind because your money, once invested, can grow over time. Even if you were to just put it into a CD or savings account, the money can earn compound interest .  

On the flip side, money that is not invested will lose value over time. Just think about what you could buy for $1 when you were a child compared to what that same $1 would get you today. This is because inflation and loss of potential earnings erode the value of your dollars. If you keep your money under your mattress for 10 years, not only will it be worth less because of inflation, but you'll also miss out on the interest it can earn when invested. 

"So many young people are so busy juggling life, they are missing out on compounding returns of investing smaller amounts of money," says Jeff Rose, founder of GoodFinancialCents.com . "Say, for example, a 25-year-old were to invest $50 per month today, they would have to invest 3-4 times that to make up the difference if they procrastinated until they were 35."

TMV is a fundamental concept that provides the foundation for virtually every financial and investing decision. From taking out a loan to negotiating a salary, or making a purchase decision, use the time value of money to evaluate the best financial course of action.

How to calculate time value of money 

Now that you understand what the time value of money is, let's look at a concrete example. Let's say someone would like to buy your car and they can offer you $15,000 for it today or $15,500 if they can pay you two years from now. TVM teaches us that $15,000 today is worth more than $15,500 in two years. 

Here's the basic formula for calculating the future value of money:

• PV is the present value of money.
• i is the interest rate or other return that could be earned.
• t is the number of years to take into consideration.
• n is the number of compounding periods of interest per year.

This will help you determine how much money you will have if you took the $15,000 and invested it today or if you waited two years for the $15,500. 

The bottom line

The time value of money is an important concept to understand for personal finance. It can help you decide how much to budget, evaluate a job offer, figure out if a loan is a good deal and help you save for the future. TVM showcases why your money loses value over time because of inflation. 

Apply the TVM formula to any loans you have to determine if it's better to pay them off or invest. You can also use it to see how increasing your retirement contributions can affect the future value of your dollars. It's a great tool that gives you information that can help you make smarter financial decisions.

• Main content

Time Value of Money Buy vs Rent Decision Case Study

Question description.

I'm working on a accounting case study and need an explanation to help me study.

see attached files see attached filessee attached filessee attached filessee attached filessee attached files

Time Value of Money: The Buy Versus Rent Decision

Sean Cleary, Stephen R. Foerster

After you READ the case, please do the following:

• Cell C8-Calculate amount based on purchase price in Cell C6
• Cell C9-Calculate amount based on purchase price in Cell C6
• Cell C10-Is the sum of +C7+C8+C9
• Cell C15-Is the difference between C6 and C9
• Cell C17-Is the “quoted annual rate” in the text
• Cell C18- Once you enter the correct amount in C17 this cell will calculate the monthly rate as well as the mortgage amounts due in Cells E15, F15 and G15
• C22 to C24-The information is contained in the first paragraph of “Financial Details” in the text
• C28-The information is in the first paragraph of the text
• C30-Is the difference between C26 and C28
• C33-Is the monthly opportunity costs (based on the monthly rate-use C18) multiplied  by C10.
• Once you have populated all the cells in yellow, please examine the results on the right hand side of the page ( beginning in column I ). If you entered all of the correct amounts in the cells on the left hand side of the page you should be able to properly analyze the right hand side of the Excel spreadsheet.  What do you think Rebecca Young should do?  Why?
• What are the key factors that Rebecca Young needs to consider in making her decision to rent or buy?
• As Rebecca Young, what decision would you make?  Describe any qualitative considerations that could factor into your decision.

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Time Value of Money: The Buy Versus Rent Decision – Case Solution

In this "Time Value of Money: The Buy Versus Rent Decision" case study, a recent MBA graduate had been renting an apartment while a similar flat had been listed for sale. The graduate is now facing the typical buy versus rent decision. Hence the grad decided to apply some of her analytical tools acquired in business school to make this decision for her personal life.

​Sean Cleary, Stephen R. Foerster Ivey ( W14403-PDF-ENG ) August 28, 2014

Case questions answered:

Case study questions answered in the first solution:

• What is the best solution to take — to rent or to buy?
• What are the assumptions you use?

Case study questions answered in the second solution:

• Calculate the best route for the graduate’s housing situation, developing your understanding of the time value of money (TVM) concepts and calculations.
• Describe your assumptions, methodology, and results in your discussion narrative, and attach a simple spreadsheet supporting your analysis.

Not the questions you were looking for? Submit your own questions & get answers .

Time Value of Money: The Buy Versus Rent Decision Case Answers

This case solution includes an Excel file with calculations.

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BACKGROUND – Time Value of Money: The Buy Versus Rent Decision Case Study

The case is about Rebecca Young, who just completed her MBA and moved to Toronto for her new job in the banking industry. She is having a dilemma between renting or buying a condo instead.

A condo unit is an identical unit next door to her rented unit. She has been renting for more than a year, and she really thinks she can afford the monthly amortization, knowing that she has a secured job in the next 5-10 years.

Let us list the facts of the case:

Her monthly rent is $3,000, and this does not include utilities and cable television, but parking is included in the monthly rent.

The purchase price of the unit is $620,000, but Rebecca thinks she can get it for $600,000. 20% of the purchase price is needed for a downpayment. This will also include both a local and provincial deed-transfer tax of 1.5% of the purchase price – this is both payable and due on the purchase date. A closing fee is estimated to be around $2,000. The total cash outlay on the purchase date totals $140,000, broken as follows:

Rebecca requested to model the amount of the outstanding principal at various points in the future, two, five, and ten years from now, and this was presented to her.

There were also scenario cases that she considered in her analysis before making her final decision. These scenario cases are presented below and are described accordingly:

• The condo price remains unchanged.
• The condo price drops 10% over the next two years, then increases back to its purchase price by the end of five years, and then increases by a total of 10% from the original price by the end of ten years.
• The condo price increases annually by the annual rate of inflation of 2% per year over the next ten years
• The condo price increases annually by an annual rate of 5% per year over the next 1ten years.

These scenario cases are properly illustrated and calculated using the Excel platform.

PRESENTATION:

Case 1 is presented to Ms. Young as saying that she is renting the condo and intelligently pursuing to invest the cash outlay of $140,000. The future value of this investment at year 2 is…

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• Business Case Studies

Finance & Accounting

Finance Reading: Time Value of Money

Finance Reading: Time Value of Money ^ 8299

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Product Description

Publication Date: December 22, 2015

Source: Harvard Business Publishing

Core Curriculum Readings in Finance provide an understanding of fundamental concepts of finance that are relevant to both financial and non-financial managers. Readings include interactive illustrations that enable mastery of concepts through hands-on illustration of key concepts. This reading introduces the concept of the time value of money: the idea that money has earning potential, so the timing of a payment matters. Given an interest rate, readers will learn to calculate the present value of a sum to be received in the future or, alternatively, the future value of a sum invested today. The reading covers compounding and discounting, the two types of calculations used to determine the future and present value of money. It concludes with more complicated calculations drawn from real-world examples, and a brief discussion of how the formulas in the reading relate to pre-programmed Excel functions. The reading includes eight interactive illustrations: "Time Value of $100 Cash" shows the value of $100 compounded or discounted over 1-, 2-, and 3-year periods; "Calculating the Present Value of Multiple Cash Flows" is an animated presentation of present value calculations involving multiple (equal) cash flows and multiple periods; "Present or Future Value of Multiple Cash Flows" covers multiple (equal) cash flows and multiple periods, and allows readers to choose whether to compute present values or future values and observe the results; "Time Value of $100 with Compounding Frequencies" allows the reader to observe the impact of varying the interest rate and compounding frequency on the present or future value of $100; "Effect of Compounding Frequency" visually illustrates the economic impact of compounding frequency on future value; "Mortgage as an Annuity" is a mortgage calculator which allows the reader to set the APR and mortgage term and see how each affects the monthly payment as well as the split between principal and interest over time; "Present Value of Perpetuities and Annuities by Term" illustrates the changing relationship between a perpetuity and annuities (which share the same annual payment stream but differ in their term lengths) as interest rates change; "Practice Questions for Time Value of Money" is a self-study tool which enables readers to check their comprehension.

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Time Value of Money for the Recent Graduate

• Time Value of Money for…

You will never have more money than when you start your first job. You likely went from working a part-time job or unpaid internship while you were a student to drawing your first salaried paycheck, complete with benefits. With the recent academic year coming to a close, there is a good chance you are, or at least know of, someone who is embarking on their career. Now is the opportunity to establish some good money habits.

There is also a good chance nowadays that you, or the recent graduate, have some significant student loan debt to begin paying off. According to the most recent data, the Class of 2017 graduates have an average student loan debt of $39,400. If you just graduated, you may be in a six-month grace period, but be forewarned: Using a 6.8% interest rate and the standard 10-year repayment plan, you’ll be getting a monthly bill for $453 very soon. Furthermore, student loan debt never goes away, even in bankruptcy.

For many young investors in situations like this, we generally see three types of people: Those who aggressively pay off their student loans and delay saving for retirement, those who save everything and finance their loans for as long as they can, and those who spend everything coming in, by renting the fancy downtown apartment, purchasing a new car, joining the exclusive gym or golf club, etc.

We all know the person who spends every penny isn’t making the wisest decisions. But what about the person who attacks their student loan debt? The mantra most everyone agrees upon is, “Get out of debt; debt is bad.” We believe you should look at what grows your net worth in totality. We recommend hedging your bets and finding a balance between saving and paying down debt. Last year, the market returned 21%. If you focus your money on paying down your student loans at 6.8%, yes, you may be paying less interest over time, but you could be missing a tax deduction for retirement savings, the free money of an employer match, and growth in market.

Without getting too technical with equations, we’re talking about the concept of the time value of money: Money is worth more today than an identical amount in the future because of its potential earning capacity. The sooner you can begin investing money, the better off you should be through the power of compounding. The average rolling 10-year return since 1925 is 10.6%, which is very likely more than the interest rate on your student loans. Further, the longer interest has to compound the more meaningful an early start will be. Compounding interest is interest earned on the initial investment and on the interest earned in each previous holding period. Waiting to save money does not cost you the compounding from $2 to $4, but the compounding from $1 million to $2 million.

If you are in the 25% tax bracket, and you save pre-tax to your 401(k), you’re essentially deferring 25% of that amount in taxes. You also don’t want to leave employer match money on the table. For example, an employer may offer to “match” 50% of your first 6% of contributions to the plan. This means that if you invest 6% of your salary into the retirement plan, your employer will add another 3%. This is the equivalent of being handed free money.

While it might seem counterintuitive, we generally recommend paying yourself first. Do not sacrifice retirement for student debt. Even if you promise to start saving when all of your debts are completely paid off, you run the risk that you’ll never get to that point.

If you have questions about finding the happy medium between paying down your student loan debt and saving for retirement, the experts at Henssler Financial will be glad to help:

• Experts Request Form
• Email:  [email protected]
• Phone: 770-429-9166.

This article is for demonstrative and academic purposes and is meant to provide valuable background information on particular investments, NOT a recommendation to buy. The investments referenced within this article may currently be traded by Henssler Financial. All material presented is compiled from sources believed to be reliable and current, but accuracy cannot be guaranteed. The contents are intended for general information purposes only. Information provided should not be the sole basis in making any decisions and is not intended to replace the advice of a qualified professional, such as a tax consultant, insurance adviser or attorney. Although this material is designed to provide accurate and authoritative information with respect to the subject matter, it may not apply in all situations. Readers are urged to consult with their adviser concerning specific situations and questions. This is not to be construed as an offer to buy or sell any financial instruments. It is not our intention to state, indicate or imply in any manner that current or past results are indicative of future profitability or expectations. As with all investments, there are associated inherent risks. Please obtain and review all financial material carefully before investing. Henssler is not licensed to offer or sell insurance products, and this overview is not to be construed as an offer to purchase any insurance products.

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Time Value of Money: A Home Investment Decision Dilemma

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Time value of money: a home investment decision dilemma description.

In early 2016, Naresh Jain was busy looking at various rental properties on popular real estate listing websites. Because of a sudden downturn in business conditions and an immediate need for money, Jain's landlord wanted to sell the property and therefore had asked Jain to vacate the premises within 30 days. Jain had been living in the spacious, two-bedroom apartment in North West Delhi for the past five years as it was within a reasonable commuting distance to his workplace. After looking at various rental properties, Jain had come across a furnished apartment identical to his, next door, and met with a broker to discuss it. During the discussion, it came up that an identical apartment in an adjoining locality was for sale at a??12.5 million. Jain was thus faced with a quantitative finance decision of buy versus rent to arrive at the right option for him given his current financial conditions and the potential future benefits. The authors Arit Chaudhury and Varun Dawar are affiliated with Institute of Management Technology, Ghaziabad.

Case Description Time Value of Money: A Home Investment Decision Dilemma

Strategic managment tools used in case study analysis of time value of money: a home investment decision dilemma, step 1. problem identification in time value of money: a home investment decision dilemma case study, step 2. external environment analysis - pestel / pest / step analysis of time value of money: a home investment decision dilemma case study, step 3. industry specific / porter five forces analysis of time value of money: a home investment decision dilemma case study, step 4. evaluating alternatives / swot analysis of time value of money: a home investment decision dilemma case study, step 5. porter value chain analysis / vrio / vrin analysis time value of money: a home investment decision dilemma case study, step 6. recommendations time value of money: a home investment decision dilemma case study, step 7. basis of recommendations for time value of money: a home investment decision dilemma case study, quality & on time delivery.

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Case Analysis of Time Value of Money: A Home Investment Decision Dilemma

Time Value of Money: A Home Investment Decision Dilemma is a Harvard Business (HBR) Case Study on Finance & Accounting , Texas Business School provides HBR case study assignment help for just $9. Texas Business School(TBS) case study solution is based on HBR Case Study Method framework, TBS expertise & global insights. Time Value of Money: A Home Investment Decision Dilemma is designed and drafted in a manner to allow the HBR case study reader to analyze a real-world problem by putting reader into the position of the decision maker. Time Value of Money: A Home Investment Decision Dilemma case study will help professionals, MBA, EMBA, and leaders to develop a broad and clear understanding of casecategory challenges. Time Value of Money: A Home Investment Decision Dilemma will also provide insight into areas such as – wordlist , strategy, leadership, sales and marketing, and negotiations.

Case Study Solutions Background Work

Time Value of Money: A Home Investment Decision Dilemma case study solution is focused on solving the strategic and operational challenges the protagonist of the case is facing. The challenges involve – evaluation of strategic options, key role of Finance & Accounting, leadership qualities of the protagonist, and dynamics of the external environment. The challenge in front of the protagonist, of Time Value of Money: A Home Investment Decision Dilemma, is to not only build a competitive position of the organization but also to sustain it over a period of time.

Strategic Management Tools Used in Case Study Solution

The Time Value of Money: A Home Investment Decision Dilemma case study solution requires the MBA, EMBA, executive, professional to have a deep understanding of various strategic management tools such as SWOT Analysis, PESTEL Analysis / PEST Analysis / STEP Analysis, Porter Five Forces Analysis, Go To Market Strategy, BCG Matrix Analysis, Porter Value Chain Analysis, Ansoff Matrix Analysis, VRIO / VRIN and Marketing Mix Analysis.

Texas Business School Approach to Finance & Accounting Solutions

In the Texas Business School, Time Value of Money: A Home Investment Decision Dilemma case study solution – following strategic tools are used - SWOT Analysis, PESTEL Analysis / PEST Analysis / STEP Analysis, Porter Five Forces Analysis, Go To Market Strategy, BCG Matrix Analysis, Porter Value Chain Analysis, Ansoff Matrix Analysis, VRIO / VRIN and Marketing Mix Analysis. We have additionally used the concept of supply chain management and leadership framework to build a comprehensive case study solution for the case – Time Value of Money: A Home Investment Decision Dilemma

Step 1 – Problem Identification of Time Value of Money: A Home Investment Decision Dilemma - Harvard Business School Case Study

The first step to solve HBR Time Value of Money: A Home Investment Decision Dilemma case study solution is to identify the problem present in the case. The problem statement of the case is provided in the beginning of the case where the protagonist is contemplating various options in the face of numerous challenges that Jain Apartment is facing right now. Even though the problem statement is essentially – “Finance & Accounting” challenge but it has impacted by others factors such as communication in the organization, uncertainty in the external environment, leadership in Jain Apartment, style of leadership and organization structure, marketing and sales, organizational behavior, strategy, internal politics, stakeholders priorities and more.

Step 2 – External Environment Analysis

Texas Business School approach of case study analysis – Conclusion, Reasons, Evidences - provides a framework to analyze every HBR case study. It requires conducting robust external environmental analysis to decipher evidences for the reasons presented in the Time Value of Money: A Home Investment Decision Dilemma. The external environment analysis of Time Value of Money: A Home Investment Decision Dilemma will ensure that we are keeping a tab on the macro-environment factors that are directly and indirectly impacting the business of the firm.

What is PESTEL Analysis? Briefly Explained

PESTEL stands for political, economic, social, technological, environmental and legal factors that impact the external environment of firm in Time Value of Money: A Home Investment Decision Dilemma case study. PESTEL analysis of " Time Value of Money: A Home Investment Decision Dilemma" can help us understand why the organization is performing badly, what are the factors in the external environment that are impacting the performance of the organization, and how the organization can either manage or mitigate the impact of these external factors.

How to do PESTEL / PEST / STEP Analysis? What are the components of PESTEL Analysis?

As mentioned above PESTEL Analysis has six elements – political, economic, social, technological, environmental, and legal. All the six elements are explained in context with Time Value of Money: A Home Investment Decision Dilemma macro-environment and how it impacts the businesses of the firm.

How to do PESTEL Analysis for Time Value of Money: A Home Investment Decision Dilemma

To do comprehensive PESTEL analysis of case study – Time Value of Money: A Home Investment Decision Dilemma , we have researched numerous components under the six factors of PESTEL analysis.

Political Factors that Impact Time Value of Money: A Home Investment Decision Dilemma

Political factors impact seven key decision making areas – economic environment, socio-cultural environment, rate of innovation & investment in research & development, environmental laws, legal requirements, and acceptance of new technologies.

Government policies have significant impact on the business environment of any country. The firm in “ Time Value of Money: A Home Investment Decision Dilemma ” needs to navigate these policy decisions to create either an edge for itself or reduce the negative impact of the policy as far as possible.

Data safety laws – The countries in which Jain Apartment is operating, firms are required to store customer data within the premises of the country. Jain Apartment needs to restructure its IT policies to accommodate these changes. In the EU countries, firms are required to make special provision for privacy issues and other laws.

Competition Regulations – Numerous countries have strong competition laws both regarding the monopoly conditions and day to day fair business practices. Time Value of Money: A Home Investment Decision Dilemma has numerous instances where the competition regulations aspects can be scrutinized.

Import restrictions on products – Before entering the new market, Jain Apartment in case study Time Value of Money: A Home Investment Decision Dilemma" should look into the import restrictions that may be present in the prospective market.

Export restrictions on products – Apart from direct product export restrictions in field of technology and agriculture, a number of countries also have capital controls. Jain Apartment in case study “ Time Value of Money: A Home Investment Decision Dilemma ” should look into these export restrictions policies.

Foreign Direct Investment Policies – Government policies favors local companies over international policies, Jain Apartment in case study “ Time Value of Money: A Home Investment Decision Dilemma ” should understand in minute details regarding the Foreign Direct Investment policies of the prospective market.

Corporate Taxes – The rate of taxes is often used by governments to lure foreign direct investments or increase domestic investment in a certain sector. Corporate taxation can be divided into two categories – taxes on profits and taxes on operations. Taxes on profits number is important for companies that already have a sustainable business model, while taxes on operations is far more significant for companies that are looking to set up new plants or operations.

Tariffs – Chekout how much tariffs the firm needs to pay in the “ Time Value of Money: A Home Investment Decision Dilemma ” case study. The level of tariffs will determine the viability of the business model that the firm is contemplating. If the tariffs are high then it will be extremely difficult to compete with the local competitors. But if the tariffs are between 5-10% then Jain Apartment can compete against other competitors.

Research and Development Subsidies and Policies – Governments often provide tax breaks and other incentives for companies to innovate in various sectors of priority. Managers at Time Value of Money: A Home Investment Decision Dilemma case study have to assess whether their business can benefit from such government assistance and subsidies.

Consumer protection – Different countries have different consumer protection laws. Managers need to clarify not only the consumer protection laws in advance but also legal implications if the firm fails to meet any of them.

Political System and Its Implications – Different political systems have different approach to free market and entrepreneurship. Managers need to assess these factors even before entering the market.

Freedom of Press is critical for fair trade and transparency. Countries where freedom of press is not prevalent there are high chances of both political and commercial corruption.

Corruption level – Jain Apartment needs to assess the level of corruptions both at the official level and at the market level, even before entering a new market. To tackle the menace of corruption – a firm should have a clear SOP that provides managers at each level what to do when they encounter instances of either systematic corruption or bureaucrats looking to take bribes from the firm.

Independence of judiciary – It is critical for fair business practices. If a country doesn’t have independent judiciary then there is no point entry into such a country for business.

Government attitude towards trade unions – Different political systems and government have different attitude towards trade unions and collective bargaining. The firm needs to assess – its comfort dealing with the unions and regulations regarding unions in a given market or industry. If both are on the same page then it makes sense to enter, otherwise it doesn’t.

Economic Factors that Impact Time Value of Money: A Home Investment Decision Dilemma

Social factors that impact time value of money: a home investment decision dilemma, technological factors that impact time value of money: a home investment decision dilemma, environmental factors that impact time value of money: a home investment decision dilemma, legal factors that impact time value of money: a home investment decision dilemma, step 3 – industry specific analysis, what is porter five forces analysis, step 4 – swot analysis / internal environment analysis, step 5 – porter value chain / vrio / vrin analysis, step 6 – evaluating alternatives & recommendations, step 7 – basis for recommendations, references :: time value of money: a home investment decision dilemma case study solution.

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Time To Value: 3 speed-to-value marketing case studies featuring A/B testing, value focusing, and niche ad targeting

This article was published in the MarketingSherpa email newsletter .

You have just moments of your customer’s attention. How will you make the best use of those precious few moments?

The most important thing you can do is to be clear and get them to the info they are seeking as quickly as possible.

As Flint McGlaughlin puts it in a recent course session, “Be clear on exactly what conclusion you are trying to win” (from Website Wireframes: See real webpages optimized for marketing conversion ).

Today we bring you three examples of brands trying to quickly, clearly communicate to the right customer to win the right conclusion.

First up, Talkspace gets out of the customer’s way and brings them to the information they are seeking by shortening an end-of-quiz animation. Then, a custom apparel company goes all in on quickly communicating the key value it delivers by focusing the company’s very name on that value element (fittingly enough, that value is speed of delivery). And finally, a nonprofit that quickly communicates clear value to potential leads by getting its message in front of the right niche audience.

Quick Case Study #1: Talkspace subsidiary increases conversion 60% by A/B testing animation length

Lasting is an app and website that offers online couples therapy. It is owned by Talkspace, a telebehavioral health company that has grown to more than 1.5 million clients and has therapists that span all 50 states.

The team’s goals were to increase conversions and new user activation on the Lasting website. To increase the efficiency of its activation funnel on the web, Josh Petrovani Miller, the Talkspace product lead for Lasting, believed it was essential to boost landing page conversion and signup completions. By optimizing the entire user experience and connecting Lasting’s search engine marketing (SEM) campaign to the in-product experience, Talkspace would drive return on advertising spend (ROAS) and revenue growth, while decreasing acquisition costs.

The team’s strategy centered on minimizing the time it takes to create an account. Once a user enters the Lasting site, they are prompted to start a relationship quiz. The purpose of the quiz is for Lasting to use the information gathered to create a tailored plan that provides the most value possible for users. At the end of the quiz, users are shown an animation informing them that their custom plan is in the process of being constructed.

“We have an experience where web traffic comes in and starts a relationship quiz and, when they complete it, they get a chance to start a trial of Lasting. At the end of the quiz, we have a little animation video that provides some information to the user,” said Miller, Senior Product Manager, Talkspace.

Creative Sample #1: Loading bar animation

The team A/B tested the Lasting activation flow. Miller hypothesized that shortening the time-to-value would lead to higher conversions, since users would be realizing that value sooner. By reducing the duration of the animation and removing friction from the signup process, the team would be able to maximize ad spend and directly impact customer acquisition cost (CAC) and ROAS by increasing landing page conversion rates.

Increasing the speed of the loading bar animation proved to be an effective way to get value to the user as fast as possible. “It was originally eight seconds long. We decided to test a shorter version that was just four seconds and, sure enough, the users that viewed a shorter video…many more of those users actually got to the checkout screen,” Miller said.

The web experiment of increasing speed-to-value by simply tweaking the length of the animation resulted in a significant 60% increase in conversions.

Web A/B testing has shown to be a key component of Lasting’s growth strategy to optimize its web user acquisition funnel. Talkspace was able to reduce friction and improve speed-to-value, driving a sizable boost in conversions. The more trial signups, the more Talkspace can grow both its user-base and revenue.

“On top of testing different video lengths, you can also try playing around with the video’s location and cover image to see if that moves the needle,” said Aaron Glazer, CEO, Taplytics (Talkspace’s A/B testing platform). “If your goal is to improve conversions, I suggest also running tests at the checkout flow. Try experimenting with things like the number of steps or screens, payment methods, autofill options and the call-to-action button copy.”

Consistent A/B testing continues to drive incremental gains for Talkspace that results in increased return on investment (ROI) and revenue.

Quick Case Study #2: Custom-apparel company grows to a $90 million company by emphasizing speed in its value proposition

Every company delivers many different types of value. But when it comes to your marketing communication, you must make a strategic decision about which element of value is most important to emphasize.

For Rush Order Tees, the name itself indicates which element of value they highlight in their go-to-market strategy – speed of product delivery (an element of value that has likely increased in importance to customers during the pandemic).

“The name of our company – Rush Order Tees – holds our marketing edge and is the greatest marketing tool we use. We’re faster and easier than 99 percent of competitors,” said Michael Nemeroff, CEO, Rush Order Tees . “We always leave capacity open to meet the demand of last-minute customers who need an urgent turnaround. Other print shops don’t normally do this.”

This value focus strategy helped the company increase sales from $20 million in 2016 to $90 million today with 90 percent of profit coming from repeat customers. The company is now the second largest custom apparel company in the world, T-shirt supplier for the Philadelphia Eagles, partner of the Philadelphia 76ers, and one of Inc’s 5000 fastest-growing private companies.

Quick Case Study #3: Charity foundation uses proxy parameters to target niche medical patient audience indirectly, nets a $16.67 CPA with social media ads

 IGA Nephropathy (IgAN) Foundation ran lead generation Facebook ads to help the foundation generate new member prospects. The charity organization works to fund research into this rare autoimmune disease that attacks kidneys. So, its desired lead definition is just a tiny niche – IgA Nephropathy patients, caregivers, and family members

The team was getting their leads through organic means like newsletter sign ups and word of mouth and decided to try the organization’s first paid campaign.

“We are a nonprofit organization by patients, for patients and our mission is to ensure that no IgA Nephropathy patient feels alone. We invested in this lead generation campaign to help reach more patients so they can access the resources and support we provide,” said Bonnie Schneider, Founder & Executive Director, IgA Nephropathy Foundation.

Niche targeting was of critical importance for the organization to recruit the right members. “While Facebook doesn’t allow you the option to target kidney disease patients, we instead used workaround parameters to target them,” said Anna Easterbrooks, Digital Marketing Director, CURA Strategies (the foundation’s communications agency).

Those parameters included:

• Kidney Disease Awareness
• Kidney Walk
• National Kidney Foundation
• American Kidney Fund
• National Kidney and Transplant Institute

“When marketers are faced with the prospect of targeting a very niche audience (in our case, IgA Nephropathy patients) it’s crucial to develop an audience profile that will allow you to map out the targeting parameters you can leverage to reach them, and those parameters may be out of the box. There’s no box you can check for niche audience targeting, like a patient of a rare kidney disease. Instead, ask yourself: what does this audience read or listen to, what kind of media outlets are they consuming? What groups are they following? What interests do they have in common?” Easterbrooks said.

She continued, “Or think of where behavior and interests can intersect, for our example we sought out targeting folks who had participated in kidney disease walks (Interest: Kidney Disease Awareness + Kidney Walk).”

Within the ad copy, the team often listed four immediate and direct member benefits – be the first to get the latest IgAN news, research, clinical trials and IgAN community events.

For the ad graphics, the team used actual photos of members gathered at awareness events, which they believe gave the ads credibility and authenticity.

Creative Sample #2: Facebook ad for charity foundation

The Facebook ads ran for two weeks at a total spend of $2,000.

• 120 leads (defined as someone who clicked on the ad and submitted their contact information via the form) with a cost per acquisition (CPA) of $16.67 per lead
• 633 clicks – “The conversion rate landed at 19%, even after the full two-week run, which is much better than Facebook’s average (one to three percent) for these campaigns!” Easterbrooks said.
• 102,983 impressions (total views)

“To be sure your targeting is working, you can set yourself up for success by adding a custom form field to your lead form that includes a key question. For example, we created a drop down for the lead to designate themselves as a patient, care partner, advocate, friend, or family member,” she said.

Here is a breakdown of the organization’s leads from the campaign:

• 77 (64% of total) are patients
• 23 (19%) are family members
• 4 (3%) are care partners
• 4 (3%) are advocates
• 2 (1%) are friends

“We tweaked the targeting a bit as we went to get a desirable ratio of patients,” Easterbrooks said. “Given that 64 percent of our leads were patients and 22 percent were family members/care partners, we’d say these parameters were effective in replicating their desired audience.”

“The campaign was a great success. This campaign enabled us to rapidly increase our membership in a very cost-effective way. In fact, it went so well, we plan on continuing to run the ad campaign for at least another month so that we can continue connecting patients and their care partners with our peer support services, resources, and updates on research and new treatment options. I highly recommend this approach to any organization looking to increase membership at their organization on a limited budget,” Schneider said.

Related Resources

Value Proposition for Startups: 3 questions every startup must have the courage to answer

Value Gulfs: Making sure there is differentiated product value when marketing upgrades and upsells

Momentum Marketing: How to get the ball rolling toward a purchase decision

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What is time to value and how do you optimize for it, share this article.

Time to value is an important metric because it allows product teams, executives, and investors to gauge how quickly they can expect a project or product initiative to pay off. It can be used to decide which projects should be prioritized or resources to maximize ROI over the long term. 

In this article, we will examine the details of time to value, how the business world has adopted it, the factors that affect it, and how to improve it for your operation. 

Skip ahead:

What is Time to Value?

Different types of time to value, importance of ttv, factors affecting time to value, how to improve time to value, how to calculate time to value, how to track time to value, time to value warning signs.

• TTV Case Studies

Time to value is a metric that measures how long an investment takes to yield returns. It is measured from the time of purchase or launch to when revenue or value exceeds costs. 

Let’s consider it from two different perspectives, as the time to value is essential for all stakeholders.

Company perspective

For a business, TTV can help measure the investment – both time and money – in a new project or product and how long it will take to start seeing returns on that investment.

For example, suppose a company launches a new software product. In that case, TTV can help them measure the time from the initial launch until they start gaining subscribers or customers who are actively using and paying for the software. 

It can also be measured from the moment of project inception or when key stakeholders sign off on resource allocation.

This doesn’t necessarily have to focus on monetary returns, either. Value can be derived in other ways, like:

• Increased customer satisfaction 
• Improved brand recognition 
• Higher employee engagement

A sustainability initiative, for instance, can build your reputation and attract new customers without an immediate monetary return.

Consumer perspective

Businesses must also consider the consumer perspective, as time to value is a factor in purchasing decisions – especially in B2B sales.

To secure a sale, you must prove that the product or service you offer will start providing value to a customer in a reasonable amount of time. They may look elsewhere if they have to wait too long to see returns on their investment.

There are a few different classifications for time to value that can provide a more nuanced understanding of the concept.

Time to Productivity (TTP)

Time to productivity measures how long a product, service, or business process takes to produce the desired result. If a new employee is hired, how long does it take them to start being productive? When a customer buys a product, how before it starts providing the expected benefit?

Time to Conversion (TTC)

For products offered on a trial or subscription basis, time to conversion measures how long it takes for a customer to decide to purchase. It can also refer to the time it takes for a visitor to your website to become a paying customer. 

Time to First Value (TTFV)

Time to first value measures the time it takes for a customer to see tangible results from using your product. It could be how long until they start seeing a meaningful return on investment, or when they access the product’s primary benefit. 

Time to Exceed Value (TTEV)

On the other hand, time to exceed value measures the time it takes for a customer to see returns beyond their initial expectations. This could be when they start using features of your product that go beyond what they initially purchased or when someone starts saving more money than expected with a subscription service. 

Time to Market (TTM)

Time to market measures how quickly a product or service can be launched. It’s typically used for products, but it can also be applied to services and processes. The goal is to get the product out as soon as possible so that you can start seeing returns on your investment sooner.

Time to Revenue (TTR)

Time to revenue measures how long it takes for a product or service to start generating revenue. This is usually a calculation from the moment a project is started, not when it is available for purchase. 

While a new product feature may project a 300% ROI, that doesn’t necessarily mean it is a good business decision. If the time to value is five years, for example, the company may miss out on other opportunities or be overtaken by competitors.

On the other hand, a project with a lower return on investment but quicker TTV may be more beneficial if it can open up new markets or increase customer satisfaction in an area where you have been lagging behind competitors. 

TTV is also important when considering how to allocate resources and prioritize projects within your organization. It helps executives decide which initiatives are most likely to provide returns quickly enough to justify their investment of time and money. 

It can be challenging to accurately predict time to value, as there are many factors that can influence it. 

Complexity of product/service

The first significant factor is complexity. If a product or service is complicated and requires extensive setup, training and/or integration, it will take longer for customers to see value in it. If you are selling an online academy, for instance, students need to start learning actionable skills quickly, or they may become frustrated and give up.

User adoption and engagement

Developing a service that isn’t going to be adopted by users is a waste of time and money. If your product isn’t user-friendly, it may take users longer to understand how to use it and get value from the product. If users don’t stay engaged with your product, they won’t become repeat customers and provide an adequate lifetime value.

Integration with existing systems

Will the product immediately integrate with existing systems and processes? Or will it require additional resources to set up the integration?

These can be significant factors for businesses, especially those that use legacy systems. If a product requires extensive integration work, its TTV can skyrocket, making it less attractive to potential customers.

Quality of customer support

Certain customers will still need support, no matter how intuitive a product is. If your customer service team isn’t fast and efficient, it could delay the TTV for a particular customer.

In fact, adequate support systems can make or break a product launch altogether. An early reputation of poor support can have a profound impact on customer adoption and the success of the product in general.

Once you understand the factors that influence time to value, there are several actions you can take to improve it. These include: 

Identifying bottlenecks

A bottleneck is any process or resource that restricts the rate of work from being completed. The first step to improving time to value is identifying these bottlenecks, so you can reduce or eliminate them. 

This can also be viewed through the lens of the customer journey . If there are any steps from the moment of purchase that slow down your customer’s  adoption or usage of the product or service, it can increase their time to value. 

Identifying and removing these obstacles will ensure customers get the most out of your offering quickly without having to go through a lengthy onboarding process. 

Increasing online education

By investing in customer education , you can reduce the time it takes customers to understand and utilize your product. This could be through webinars, video tutorials, online courses or even an online academy that helps them quickly come up to speed with the features and functionality of your offering. 

Streamlining processes

There shouldn’t be any hesitation when customers are purchasing your product or service. Streamlining processes such as entering payment details or shipping information can reduce the time it takes for them to receive the product and start using it. 

Otherwise, the TTV will continue to be extended as customers wait for their product, install it, and set up their environment. 

Improving customer support

The moment a customer has an issue, the TTV clock starts ticking. The longer it takes to resolve their issue, the more time they spend not being able to use the product or service. 

Providing timely and effective customer support can drastically improve your TTV and lead to better customer loyalty over time. 

Investing in technologies

To accomplish this, investing in the right technologies can be critical. Automation, artificial intelligence (AI), and machine learning can help streamline processes, improve customer support, and even provide insights into how customers are using your product to better optimize for TTV. 

Once again, this can be examined through both company and consumer perspectives. 

The most common way to calculate time to value is by tracking the amount of revenue generated each month and comparing it with the cost of creating, launching,marketing and maintaining the product or service. The goal is to identify at what point in time that revenue exceeds costs. 

For example, if you spent $1,000 developing a new website, but it took three months for it to generate $1,001 in revenue, then your TTV would be three months.

On the other hand, the TTV calculation for an individual product is based on the customer journey. By reaching milestones like first value, productivity, excess value, and loyalty, you can measure how long it takes for a customer to realize the value of your product. 

To calculate your average TTV, follow these steps: 

• Compile a list of all the customers who have used your product or service in the last month. 
• Track each customer’s journey from purchase to the realization of value, and log how long it took them to reach each milestone. 
• Calculate an average TTV based on these results, which can then be used as a benchmark for future purchases or initiatives.

If this number is too high, consider the factors that could be influencing it and adjust your strategy accordingly.

There are a handful of different ways to track time to value, including using standard software tools and custom-built solutions.

Traditional analytics

Many companies use traditional analytics tools like Google Analytics to track user behavior on their product or website. These can be used to analyze customer journeys and calculate TTV for individual customers. 

Heatmaps are visualizations of user activity that provide insight into how users interact with a particular page or product feature over a set period of time. They can be used to measure the time it takes for customers to complete tasks, providing an indication of when they start seeing value from your product or service. 

User surveys

Surveys are another way to track time to value. You can use them to ask users about their satisfaction with the product and how long it took for them to see results. This will provide valuable insight into customer experience and can help you identify areas that need improvement. 

A/B testing

A/B testing is an effective way to measure the impact of changes over time. By running experiments and comparing different versions of a product, you can quickly identify which features help customers see value faster.

Support tickets

Support tickets can also be used to measure time to value. By tracking the average resolution time for customer issues, you can determine how quickly customers are receiving assistance and seeing results from your product or service. 

Other ways, like customer interviews and focus groups, can provide further insight into the customer experience. 

When tracking time to value, it’s important to look out for warning signs that suggest something isn’t quite right.

• High churn rates: If customers aren’t seeing the results they expect from your product or service and are leaving or “churning” in droves, it could be a sign that TTV is too long. 
• Low customer satisfaction scores: Poor ratings on surveys or reviews can also indicate that customers are not getting what they expect from your product or service in a timely manner. 
• Long onboarding process: A lengthy onboarding process can be a sign that customers are having difficulty understanding how to use your product or service, which can lead to a long TTV. 

Any of these should send up a red flag and prompt you to look into what is causing the issue.

Time To Value Case Studies

Let’s look at a couple of case studies to see how time to value principles can be applied in the real world. 

If you’ve ever spent time on Instagram, you’ve probably noticed Later. It’s a tool that helps brands and influencers manage their Instagram accounts more efficiently, by scheduling posts in advance and tracking the performance of each post. 

The company was able to reduce the time it took customers to realize the value of its product through a combination of improved onboarding processes and education resources. 

With the help of Thinkific Plus, they created an extensive library of video tutorials, webinars, case studies, and blog posts that allowed users to quickly understand how to use the platform effectively. 

Suddenly, the time to value for users was considerably shortened, and customer retention went through the roof. 

After converting a traditional onboarding webinar to an online course, they saw a 320% increase in retention, and a 467% increase in feature adoption. Their paid subscription plans also were purchased more often,  as customers saw the value in Later more quickly. 

An all-in-one customer relationship management, marketing automation, e-commerce, payments, and analytics platform, Keap’s mission is to help small businesses achieve rapid growth.

It has a partner program that helps drive sales, but a long onboarding process was causing delays and preventing potential partners from reaching any value.

To reduce this time to value, Keap made a conscious effort to streamline the onboarding process. By investing in an online education platform with Thinkific, they reduced onboarding times by 30%, allowing them to certify partners quicker, who could then start generating value. 

Not only did it reduce the TTV for Keap and each partner, it added excess value by more thoroughly training and educating partners on the platform. 

For both companies and consumers, TTV is a critical metric to understand. Without a reasonable time to value, companies risk leaving money on the table, and customers may not realize their goals. 

By creating a plan to identify bottlenecks and invest in online education, you can ensure that your product or service is ready for use as quickly as possible.  This will enable you to maximize ROI and create lasting value for all stakeholders involved.

Request a call with the Thinkific Plus team to receive guidance on how your business can leverage online education to reduce time to value today.

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Anxiety, Depression, and Quality of Life Among Infertile Women: A Case-Control Study

Affiliations.

• 1 Obstetrics and Gynaecology, All India Institute of Medical Sciences, Rishikesh, Rishikesh, IND.
• 2 Psychiatry, All India Institute of Medical Sciences, Rishikesh, Rishikesh, IND.
• PMID: 38590470
• PMCID: PMC10999894
• DOI: 10.7759/cureus.55837

Introduction Pregnancy holds significant cultural and social value for women. However, women facing challenges in conceiving often grapple with emotional distress, including depression and anxiety. The connection between psychological elements (stress, anxiety, and depression) and infertility is complex, influenced by multiple factors, and bidirectional. Infertile women are more likely to develop mental illnesses, marital dissatisfaction, and impaired quality of life compared to the individuals of the fertile group. Thus, the study aimed to assess levels of anxiety, depression, and quality of life among infertile women compared to fertile women. Methods This case-control study conducted at a tertiary care center recruited 100 nulliparous women between the age group of 20 and 38 years with primary or secondary infertility, while those with male factor infertility were excluded. The control group (N=100) comprised normal parous women who had at least one child. The primary objective of the study was to assess the impact of infertility on the mental health and quality of life of women seeking infertility treatment. Outcome measures included standardized tools such as the WHOQOL-BREF questionnaire to assess the quality of life across multiple domains (e.g., physical, psychological, social, and environmental) as well as the Depression Anxiety and Stress Scale (DASS-21) to measure levels of anxiety, depression, and stress. Cronbach's alpha was used to measure the tool's reliability. A P value of <0.05 was considered statistically significant. Results Baseline sociodemographic parameters were comparable between the two groups. The mean age of infertile women was 30.6±3.9 years compared to 31.5±3.2 years in fertile women (P=0.076). Using the WHOQOL-BREF scale, we found that the quality of life was better in the fertile group compared to the infertile group through all the physical, psychological, social, and environmental domains (P<0.001). The infertile group had a significantly higher number of women with anxiety, depression, and stress. The questionnaires showed high internal reliability. Conclusion Infertile women experienced a lower quality of life in various domains, higher levels of anxiety, and increased rates of depression compared to fertile counterparts. The study findings underscore the multidimensional impact of infertility, emphasizing the need for comprehensive healthcare approaches to address the psychosocial challenges faced by women undergoing infertility treatment.

Keywords: anxiety; depression; infertility; mental health; quality of life; stress.

Copyright © 2024, Bahadur et al.

• Open access
• Published: 09 April 2024

Creating culturally-informed protocols for a stunting intervention using a situated values-based approach ( WeValue InSitu ): a double case study in Indonesia and Senegal

• Annabel J. Chapman 1 ,
• Chike C. Ebido 2 , 3 ,
• Rahel Neh Tening 2 ,
• Yanyan Huang 2 ,
• Ndèye Marème Sougou 4 ,
• Risatianti Kolopaking 5 , 6 ,
• Amadou H. Diallo 7 ,
• Rita Anggorowati 6 , 8 ,
• Fatou B. Dial 9 ,
• Jessica Massonnié 10 , 11 ,
• Mahsa Firoozmand 1 ,
• Cheikh El Hadji Abdoulaye Niang 9 &
• Marie K. Harder 1 , 2  

BMC Public Health volume  24 , Article number:  987 ( 2024 ) Cite this article

184 Accesses

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International development work involves external partners bringing expertise, resources, and management for local interventions in LMICs, but there is often a gap in understandings of relevant local shared values. There is a widespread need to better design interventions which accommodate relevant elements of local culture, as emphasised by recent discussions in global health research regarding neo-colonialism. One recent innovation is the concept of producing ‘cultural protocols’ to precede and guide community engagement or intervention design, but without suggestions for generating them. This study explores and demonstrates the potential of an approach taken from another field, named WeValue InSitu , to generate local culturally-informed protocols. WeValue InSitu engages stakeholder groups in meaning-making processes which ‘crystallize’ their envelope of local shared values, making them communicable to outsiders.

Our research context is understanding and reducing child stunting, including developing interventions, carried out at the Senegal and Indonesia sites of the UKRI GCRF Action Against Stunting Hub. Each national research team involves eight health disciplines from micro-nutrition to epigenetics, and extensive collection of samples and questionnaires. Local culturally-informed protocols would be generally valuable to pre-inform engagement and intervention designs. Here we explore generating them by immediately following the group WeValue InSitu crystallization process with specialised focus group discussions exploring: what local life practices potentially have significant influence on the environments affecting child stunting, and which cultural elements do they highlight as relevant. The discussions will be framed by the shared values, and reveal linkages to them. In this study, stakeholder groups like fathers, mothers, teachers, market traders, administrators, farmers and health workers were recruited, totalling 83 participants across 20 groups. Themes found relevant for a culturally-informed protocol for locally-acceptable food interventions included: specific gender roles; social hierarchies; health service access challenges; traditional beliefs around malnutrition; and attitudes to accepting outside help. The concept of a grounded culturally-informed protocol, and the use of WeValue InSitu to generate it, has thus been demonstrated here. Future work to scope out the advantages and limitations compared to deductive culture studies, and to using other formative research methods would now be useful.

Peer Review reports

Although progress has been made towards the SDG of ‘Zero Hunger by 2025’, the global rates of malnutrition and stunting are still high [ 1 ]. Over the past 20 years, researchers have implemented interventions to reduce undernutrition, specifically focussing on the first 1000 days of life, from conception to 24 months [ 2 ]. However, due to both differing determinants between countries [ 3 , 4 ] as well as varying contextual factors, it is clear that no single fixed approach or combination of approaches can be relied on when implementing stunting interventions [ 5 , 6 , 7 ]. Furthermore, when external researchers design interventions for local areas in Low- and Middle-Income Countries (LMICs) they can often overlook relevant local cultural factors that consequently act as barriers to intervention uptake and reduce their effectiveness, such as geographical factors and the levels of migration in certain populations [ 8 , 9 ], or social norms or perceptions relating to accepting outside help, and power dynamics related to gender [ 10 , 11 , 12 ]. The inclusion of cultural level factors in behaviour change interventions has been proposed as a requirement for effective interventions [ 13 ]. However, despite the breadth of literature highlighting the negative impacts from failing to do this, the lack of integration or even regard of local culture remains a persistent problem in Global Health Research [ 14 ], possibly hindering progress towards the SDGs. Thus, there is a need for approaches to integrate local cultural elements into intervention design.

This lack of understanding of relevant local culture, social norms and shared values also has ethical implications. The field of Global Health Ethics was predominantly developed in the Global North, in High Income Countries (HICs), embedding values common in those countries such as the prominence of individual autonomy [ 15 , 16 ]. Researchers from HICs carrying out research in LMICs may wrongly assume that values held in the Global North are universal [ 14 ] and disregard some local values, such as those related to family and collective decision making, which are core to many communities in LMICs. It is therefore important for outside researchers to have an understanding of relevant local values, culture and social norms before conducting research in LMICs so as not to impose values that do not align with local culture and inadvertently cause harm or offence [ 16 , 17 ]. The importance of this is compounded by the colonial history that is often present in relationships between research communities in HICs and LMICs, and the fact that the majority of the funding and leading institutions are still located in the Global North [ 18 , 19 ]. Thus, conscious steps must be taken to avoid neo-colonialism in Global Health Research [ 20 ]. From a health-equity perspective, it is essential to ensure that those in vulnerable communities are not hindered from involvement in interventions to improve nutrition. Encouraging uptake by such communities could be provided if salient local shared values, norms and culture were taken into account [ 21 ].

In a recent paper, Memon et al., (2021) highlight the usefulness of first creating a cultural protocol that can precede and guide subsequent stages of community engagement or intervention design to ensure that salient local values are known to external researchers coming into the community [ 16 ]. We adopt the use of the concept of a cultural protocol, referring to locally-generated guidance about key values, norms, behaviours and customs relevant to working with the local community. However, we prefer the term, ‘culturally-informed protocol’ since this relates to only cultural elements deemed salient by the researchers, and locally, rather than any comprehensive notion of culture, nor extending beyond the research context.

Memon et al. (2021), point out links between the creation of such a protocol and existing codes of practice that have already been created for some cultures such as the Te Ara Tika, a Guideline for Māori Research Ethics [ 22 ]. Currently, research and interventions in Global Health can be informed by a stage of formative research involving one-to-one interviews, focus groups or direct observations, which can sometimes be ethnographic in nature such as within Focussed Ethnographic Studies or Rapid Assessment Procedures [ 23 , 24 , 25 ]. Although these methods can be effective to inform intervention designs, they have disadvantages like: can take long periods to complete [ 26 ], can be resource intensive [ 26 ] and can lack cultural acceptability [ 27 ]. These limitations may account for the frequent neglect of their use generally, highlighted by Aubel and Chibanda (2022) [ 14 ]. Additionally, none of these methods work towards making explicit local values, or towards the creation of a culturally-informed protocol. In brief, the literature suggests a need to develop alternative methods of Formative Research for understanding locally relevant cultural elements, that are less time-consuming and can generate data that is more easily translatable to intervention design. In addition, these approaches must be applicable in different cultures. Additionally, the protocols produced must be actionable and practical not only for guiding interactions between research teams but also for guiding the initial stages of intervention design.

The work presented here aims to address several of these needs. It includes an exploration of the usefulness of the WeValue InSitu ( WVIS ) approach because that has previously been shown, in environmental management domains, to offer a way to gather in-depth values-based perspectives from a target population [ 28 , 29 ] It was first created through action research, and co-designed to enable civil society organisations to better understand and measure the values-based aspects of their work [ 30 ]. The core WeValue InSitu process (detailed in Table 1 ) involves the crystallization of shared values, with a facilitator guiding a group of participants with shared experiences, through cycles of tacit meaning-making (using a stage of photo-elicitation and triggering) [ 31 ], until they can articulate more explicitly their shared values, in concise and precise statements. These statements are then linked together in a framework by the participants. In an example case in Nigeria, the results of the WVIS approach hinted at the creation of a culturally-informed protocol through an analysis of the shared values frameworks to find cultural themes for the creation of an indicator tool that was used to evaluate several development scenarios based on their social acceptability [ 29 ].

Furthermore, it has been found that if a group of WVIS participants take part in a specialised focus group discussion (FGD), named Perspectives EXploration (PEX:FGD) immediately afterward the main workshop, then they easily and articulately express their perspectives on the topics raised for discussion - and with allusions to the shared values they had crystallised just prior. In an example from Shanghai, the PEX:FGDs focussed on eliciting perspectives on climate change, which were shown to be closely linked with the cultural themes existing within the shared values frameworks produced immediately prior [ 32 ]. In that case, the PEX:FGDs allowed the cultural themes generated during the main WVIS workshop to be linked more closely to the research question. Those results suggested that the WVIS plus PEX:FGD approach could be used to create a specialised culturally-informed protocol for improved intervention design.

In the study presented here, the WVIS approach was explored for the purpose of creating culturally-informed protocols to inform the planning of interventions within two localities of the UKRI GCRF Action Against Stunting Hub [ 33 ]. The work was carried out in two parts. Firstly, the WVIS main workshop was used to elicit cultural themes within the target communities, indicating key elements to consider to ensure ethical engagement. Secondly, the PEX focus group discussions focussed on life practices related to stunting which we explored for the purpose of tailoring the culturally-informed protocols to the specific purpose of improving the design of an example intervention. The Action Against Stunting Hub works across three sites where stunting is highly prevalent but via different determinants: East Lombok in Indonesia (estimated 36% of under-fives stunted), Kaffrine in Senegal (estimated 16% of under-fives stunted) and Hyderabad in India (estimated 48% of under-fives stunted) [ 34 ]. We propose that, the information about local shared values in a given site could be used to inform the design of several interventions, but for our specific exploration the focus here is a proposed ‘egg intervention’, in which pregnant women would be provided with an egg three times per week as supplement to their diet. This study proposes that identifying shared values within a community, alongside information about local life practices, provides critical cultural information on the potential acceptability and uptake of this intervention which can be used to generate culturally-informed protocols consisting of recommendations for improved intervention design.

In this paper we aim to explore the use of the WVIS approach to create culturally-informed protocols to guide engagement and inform the design of localised egg interventions to alleviate stunting in East Lombok, Indonesia and Kaffrine, Senegal. We do this by analysing data about local shared values that are crystallized using the WeValue InSitu ( WVIS ) process to provide clear articulation of local values, followed by an analysis of life practices discussed during PEX:FGD to tailor the culturally-informed protocols for the specific intervention design.

Study setting

This research was exploratory rather than explanatory in nature. The emphasis was on demonstrating the usefulness of the WeValue InSitu ( WVIS ) approach to develop culturally-informed protocols of practical use in intervention design, in different cultural sites. This study was set within a broader shared-values workstream within the UKRI GCRF Action Against Stunting Hub project [ 33 ]. The Hub project, which was co-designed and co-researched by researchers from UK, Indonesia, Senegal and India, involves cohorts of 500 women and their babies in each site through pregnancy to 24 months old, using cross-disciplinary studies across gut health, nutrition, food systems, micro-nutrition, home environment, WASH, epigenetics and child development to develop a typology of stunting. Alongside these health studies are studies of the shared values of the communities, obtained via the WVIS approach described here, to understand the cultural contexts of that diverse health data. In this study the data from East Lombok, Indonesia and Kaffrine, Senegal were used: India’s data were not yet ready, and these two countries were deemed sufficient for this exploratory investigation.

The WVIS approach

The WVIS approach is a grounded scaffolding process which facilitates groups of people to make explicit their shared values in their own vocabulary and within their own frames (details in Fig. 1 and activities in Table 1 ). The first stage of the WVIS is Contextualisation, whereby the group identifies themselves and set the context of their shared experiences, for example, as ‘mothers in East Lombok, Indonesia’. Subsequently, there is a stage of Photo Elicitation, in which the group are first asked to consider what is important, meaningful or worthwhile to them about their context (e.g., ‘being mothers in East Lombok, Indonesia’) and then asked to choose photos from a localised set that they can use as props to help describe their answer to the group [ 29 ]. After this, a localised Trigger List is used. This Trigger List consists of 109 values statements that act as prompts for the group. Examples of these values statements are included below but all the statements begin with “it is important to me/us that…”. The group are asked to choose which statements within the trigger list resonate with them, and those are taken forward for group intersubjective discussion. After a topic of their shared values has been explored, the group begin to articulate and write down their own unique statements of them. These also all begin with “It is important to me/us that…”. After discussing all pressing topics, the group links the written statements on the table into a unique Framework, and one member provides a narrative to communicate it to ‘outsiders’. The WVIS provides a lens of each group’s local shared values, and it is through this lens that they view the topics in the focus group discussions which immediately follow, termed Perspectives EXplorations (PEX:FGDs).

Schematic of the macro-level activities carried out during the WeValue InSitu ( WVIS ) main workshop session

This results in very grounded perspectives being offered, of a different nature to those obtained in questionnaires or using external frameworks [ 31 ]. The specific PEX:FGD topics are chosen as pertinent to stunting contextual issues, including eating habits, food systems and environments, early educational environments, and perceptions of stunting. The local researchers ensured that all topics were handled sensitively, with none that could cause distress to the participants. The data for this study were collected over 2 weeks within December 2019–January 2020 in workshops in East Lombok, Indonesia, and 2 weeks within December 2020 in Kaffrine, Senegal.

The PEX:FGDs were kept open-ended so that participants could dictate the direction of the discussion, which allowed for topics that may not have been pre-considered by the facilitators to arise. Sessions were facilitated by local indigenous researchers, guided in process by researchers more experienced in the approach, and were carried out in the local languages, Bahasa in East Lombok, Indonesia and French or Wolof in Kaffrine, Senegal.

Development of localised WVIS materials

Important to the WVIS approach is the development of localised materials (Table 1 ). The main trigger list has been found applicable in globalised places where English is the first language, but otherwise the trigger lists are locally generated in the local language, incorporating local vocabulary and ways of thinking. To generate these, 5–8 specific interviews are taken with local community members, by indigenous university researchers, eliciting local phrases and ways of thinking. This is a necessary step because shared tacit values cannot be easily accessed without using local language. Examples of localised Trigger Statements produced this way are given below: (they all start with: “It is important to me/us that…”):

…there is solidarity and mutual aid between the people

…I can still be in communication with my children, even if far away

…husbands are responsible for the care of their wives and family

…the town council fulfils its responsibility to meet our needs

…people are not afraid of hard, and even manual work

Study participants

The group participants targeted for recruitment, were selected by local country Hub co-researchers to meet two sets of requirements. For suitability for the WVIS approach they should be between 3 and 12 in number; belong to naturally existing groups that have some history of shared experiences; are over 18 years old; do not include members holding significantly more power than others; and speak the same native language. For suitability in the PEX:FGD to offer life practices with relevance to the research topic of stunting, the groups were chosen to represent stakeholders with connections to the food or learning environment of children (which the Action Against Stunting Hub refer to as the Whole Child approach) [ 33 ]. The university researchers specialising in shared values from the UK, and Senegal and Indonesia respectively, discussed together which stakeholder groups might be appropriate to recruit. The local researchers made the final decisions. Each group was taken through both a WVIS workshop and the immediately-subsequent PEX:FGD.

Data collection and analysis

Standard data output from the WeValue session includes i) the jointly-negotiated bespoke Statements of shared values, linked together in their unique Framework, and ii) an oral recording of a descriptive Narrative of it, given by the group. These were digitized to produce a single presentation for each group as in Fig. 2 . It represents the synthesised culmination of the crystallisation process: a portrait of what was ‘important’ to each stakeholder group. Separately, statements from the group about the authenticity/ownership of the statements are collected.

An illustrative example of one digitized Shared Values Framework and accompanying Narrative from a teacher’s group in East Lombok, Indonesia. The “…” refers to each statement being preceded by “It is important to us that…”

When these Frameworks of ‘Statements of Shared Values’ are viewed across all the groups from one locality (Locality Shared Values Statements), they provide portraits of ‘what is important’ to people living there, often in intimate detail and language. They can be used to communicate to ‘outsiders’ what the general cultural shared values are. In this work the researchers thematically coded them using Charmaz constructionist grounded theory coding [ 35 ] to find broad Major Cultural Themes within each separate locality.

The second area of data collection was in the post- WVIS event: the PEX:FGD for each group. A translator/interpreter provided a running commentary during these discussions, which was audio recorded and then transcribed. The specific topics raised for each group to discuss varied depending on their local expertise. This required completely separate workstreams of coding of the dataset with respect to each topic. This was carried out independently by two researchers: one from UK (using NVivo software (Release 1.3.1)) and one from the local country, who resolved any small differences. All the transcripts were then collated and inductively, interpretively analysed to draw out insights that should be relayed back to the Action Against Stunting Hub teams as contextual material.

The extracts of discussion which were identified as relevant within a particular Hub theme (e.g. hygiene) were then meta-ethnographically synthesised [ 36 ] into ‘Hub Theme Statements’ on each topic, which became the core data for later communication and interrogation by other researchers within the Action Against Stunting Hub. These statements are interpretations of participants’ intended meanings, and links from each of them to data quotes were maintained, enabling future interpretations to refer to them for consistency checks between received and intended meaning.

In this investigation, those Hub Theme Statements (derived from PEX:FGD transcripts) were then deductively coded with respect to any topics with potential implications of the egg intervention. Literature regarding barriers and facilitators to nutrition interventions indicated the following topics could be relevant: attitudes to accepting help; community interactions; cooking and eating habits; traditional beliefs about malnutrition; sharing; social hierarchies [ 12 , 37 , 38 ] to which we added anything related to pregnancy or eggs. This analysis produced our Egg Intervention Themes from the data.

The Major Cultural Themes and Egg Intervention Themes were then used to create a set of culture-based recommendations and intervention specific recommendations respectively for each locality. These recommendations were then combined to form specialized culturally-informed protocols for the egg intervention in each locality: East Lombok, Indonesia and Kaffrine, Senegal. The process is displayed schematically in Fig.  3 .

Schematic representation of the method of production of the culturally-informed protocol for each locality

The preparation of the localised WVIS materials at each site took 6 hours of interview field work, and 40 person hours for analysis. The 10 workshops and data summaries were concluded within 10 workdays by two people (80 person hours). The analysis of the PEX:FGD data took a further 80 person hours. Thus, the total research time was approximately 200 person hours.

The stakeholder group types are summarised in Table 2 . The data is presented in three parts. Firstly, the Major Cultural Themes found in East Lombok, Indonesia and in Kaffrine, Senegal are described – the ones most heavily emphasised by participants. Then, the Egg Intervention Themes and finally, the combined set of Recommendations to comprise a culturally-informed protocol for intervention design for each location. Quotations are labelled INDO or SEN for East Lombok, Indonesia and Kaffrine, Senegal, respectively.

Major cultural themes from frameworks and narratives

These were derived from the Locality Shared Values Statements produced in the WVIS .

East Lombok, Indonesia

Religious values.

Islamic values were crucially important for participants from East Lombok, Indonesia and to their way of life. Through living by the Quran, participating in Islamic community practices, and teaching Islamic values to their children, participants felt they develop their spirituality and guarantee a better afterlife for themselves and their children. Participants stated the Quran tells them to breastfeed their children for 2 years, so they do. Despite no explicit religious official curriculum in Kindergarten, the teachers stated that it was important to incorporate religious teaching.

“East Lombok people always uphold the religious values of all aspects of social life.”

“It is important for me to still teach religious values even though they are not clearly stated in the curriculum.” – Workshop 1 INDO (teachers).

“In Quran for instance, we are told to breastfeed our kids for 2 years. We can even learn about that ” – Workshop 3 INDO (mothers).

Related to this was the importance of teaching manners to children and preventing them from saying harsh words. Teachers stated that it was important to create a happy environment for the children and to ensure that they are polite and well-behaved. Similarly, mothers emphasised the need to teach their children good religious values to ensure they will be polite and helpful to their elders.

“Children don’t speak harsh words.”

“My children can help me like what I did to my parents”.

– Workshop 8 INDO (mothers).

Togetherness within families and the community

The Locality Shared Values Frameworks stressed the importance of togetherness, both within family and community. Comments mentioned it being important that people rely heavily on their family and come together in times of need to support each other and provide motivation. This was also important more broadly, in that people in society should support each other, and that children grow up to contribute to society. This was also reflected in comments around roles within the family. Despite women being primary care givers, and men working to finance the family, participants stated that they follow a process of consultation to make decisions, and when facing hardships.

“that we have the sense of kinship throughout our society”.

“We have togetherness as mothers”.

“For the family side, whatever happens we need to be able to be united as a whole family. We need to have the [sense of] forgiveness for the sake of the children” – Workshop 2 INDO (mothers).

Attitudes about extra-marital pregnancy

In East Lombok, Indonesia, it was essential to both mothers and fathers that pregnancy happened within a marriage, this was to ensure that the honour of the family was upheld and that the lineage of the child was clear. The potential danger to health that early pregnancies can cause was also acknowledged.

“If they don’t listen to parents’ advice, there will be the possibility of pre-marital pregnancy happening, which will affect the family [so much].

The affect is going to be ruining the good name, honour and family dignity. When the children [are] born outside [of] marriage, she or he will have many difficulties like getting a birth certificate [and] having a hard time when registering to school or family” - Workshop 4 INDO (mothers).

“ To make sure that our children avoid getting married at a very young age and moreover [avoid] having free sex so that they will not get pregnant before the marriage” - Workshop 9 INDO (fathers).

Kaffrine, Senegal

The Major Cultural Themes which emerged from the Kaffrine data are described below. As these are grounded themes, they are different than those seen in East Lombok, Indonesia.

Access to healthcare

A recurring theme amongst the groups in Kaffrine were aspirations of affordable and easy-to-access healthcare. Community health workers stated the importance of encouraging women to give birth in hospitals and spoke of the importance of preventing early pregnancy which result from early marriages. Giving birth in hospitals was also a concern for Public Office Administrators who highlighted that this leads to subsequent issues with registering children for school. Mothers and fathers stated the importance of being able to afford health insurance and access healthcare so that they could take care of themselves.

“That the women give birth in the hospital” – Workshop 11 SEN (CHWS).

“To have affordable health insurance ” – Workshop 10 SEN (mothers).

“To have access to health care ” – Workshop 3 SEN (fathers).

“It is important that women give birth in the hospital in order to be able to have a certificate that allows us to establish the civil status” – Workshop 9 SEN (administrators).

Additionally, Community health workers spoke of their aspiration to have enough supplements to provide to their community so as to avoid frustration at the lack of supply, and mothers spoke of their desire to be provided with supplements.

“To have dietary supplements in large quantities to give them to all those who need them, so as not to create frustration” – Workshop 11 SEN (CHWS).

Another aspect of access to healthcare, was mistrust between fathers and community health workers. Community health workers explained that sometimes men can blame them when things go wrong in a pregnancy or consider their ideas to be too progressive. Thus, to these community health workers the quality of endurance was very important.

“Endurance (Sometimes men can accuse us of influencing their wives when they have difficulties in conceiving)” – Workshop 5 SEN (CHWs).

Another recurring theme was the importance of having secure employment and a means to support themselves; that there were also jobs available for young people, and that women had opportunities to make money to help support the family. This included preventing early marriages so girls could stay in school. Having jobs was stated as essential for survival and important to enable being useful to the community and society.

“To have more means of survival (subsistence) to be able to feed our families”.

“To have a regular and permanent job”.

“We assure a good training and education for our children so that they will become useful to us and the community”.

“ Our women should have access to activities that will support us and lessen our burden” – Workshop 3 SEN (fathers).

It was considered very important to have a religious education and respect for religious elders. Moreover, living by, and teaching, religious values such as being hard working, humble and offering mutual aid to others, was significant for people in Kaffrine.

“Have an education in the Islamic Culture (Education that aligns with the culture of Islam)”.

“Respect toward religious leaders” – Workshop 3 SEN (fathers).

“ To organize religious discussions to develop our knowledge about Islam ” - Workshop 10 SEN (mothers).

“ Have belief and be prayerful and give good counselling to people ” - Workshop 4 SEN (grandmothers).

Egg intervention themes from each country from perspectives EXplorations focus group discussion data

Below are results of analyses of comments made during the PEX:FGDs in East Lombok, Indonesia and Kaffrine, Senegal. The following codes were used deductively: attitudes to accepting outside help, traditional gender roles, food sharing, traditional beliefs, social hierarchies and understanding of stunting and Other. These topics were spoken about during open discussion and were not the subject of direct questions. For example, topics relating to traditional gender roles came up in East Lombok, during conversations around the daily routine. Thus, in order to more accurately reflect the intended meaning of the participants, these were labelled food practices, under the “Other” theme. If any of the themes were not present in the discussion, they are not shown below.

Attitudes to accepting outside help

Few mentions were made that focussed on participants attitudes to accepting outside help, but participants were sure that they would not make changes to their menus based on the advice of outside experts. Additionally, teachers mentioned that they are used to accepting help from local organisations that could to help them to identify under-developed children.

“ We don’t believe that [the outsiders are] going to change our eating habits or our various menus ” – Workshop 3 INDO (Mothers).

Traditional gender roles

In East Lombok, mothers spoke about how their husbands go to work and then provide them with daily money to buy the food for the day. However, this was discussed in relation to why food is bought daily and is thus discussed below in the topics Other – Food practices.

Food sharing

In East Lombok, Indonesia, in times when they have extra food, they share it with neighbours, in the hope that when they face times of hardship, their neighbours will share with them. Within the household, they mentioned sharing food from their plate with infants and encouraging children to share. Some mothers mentioned the importance of weekly meetings with other mothers to share food and sharing food during celebrations.

“ Sometimes we share our food with our family. So, when we cook extra food, we will probably send over the food to our neighbour, to our families. So, sometimes, with the hope that when we don’t have anything to eat, our neighbour will pay for it and will [share with] us.” – Workshop 3 INDO (Mothers).

“Even they serve food for the kids who come along to the house. So, they teach the kids to share with their friends. They provide some food. So, whenever they play [at their] house, they will [eat] the same.” – Workshop 2 INDO (Mothers).

Understanding of stunting

The teachers in East Lombok were aware of child stunting through Children’s Development Cards provided by local healthcare organizations. They stated that they recognise children with nutrition problems as having no patience period, no expression, no energy for activities and less desire to socialise and play with other children. The teachers said that stunted children do not develop the same as other children and are not as independent as children who are the proper height and weight for their development. They also stated that they recognise stunted children by their posture, pale faces and bloated stomachs. They explained how they usually use the same teaching methods for stunting children, but will sometimes allow them to do some activities, like singing, later, once the other children are leaving.

“ They have no patience period, don’t have any energy to do any of the activities. No expression, only sitting down and not mingling around with the kids. They are different way to learn. They are much slower than the other kids .” – Workshop 1 INDO (teachers).

“ When they are passive in singing, they will do it later when everyone else is leaving, they just do it [by] themselves ” – Workshop 1 INDO (teachers).

Specific views on eggs

In East Lombok, Indonesia, there were no superstitions or traditional beliefs around the consumption of eggs. When asked specifically on their views of eggs, and if they would like to be provided with eggs, women in East Lombok said that they would be happy to accept eggs. They also mentioned that eggs were a food they commonly eat, feed to children and use for convenience. Eggs were considered healthy and were common in their house.

“ We choose eggs instead. If we don’t have time, we just probably do some omelettes or sunny side up. So, it happens, actually when we get up late, we don’t have much time to be able to escort our kids to the school, then we fry the eggs or cook the instant noodles. And it happens to all mothers. So, if my kids are being cranky, that’s what happens, I’m not going to cook proper meals so, probably just eggs and instant noodles.” – Workshop 3 INDO (Mothers).

Other important topics – food practices

Some detailed themes about food practices were heard in East Lombok, Indonesia. The women were responsible for buying and preparing the food, which they purchased daily mainly due to the cost (their husbands were paid daily and so provided them with a daily allowance) and lack of storage facilities. They also bought from mobile vendors who came to the street, because they could buy very small amounts and get occasional credit. The mother decided the menu for the family and cooked once per day in the morning: the family then took from this dish throughout the day. Mothers always washed their fruits and vegetables and tried to include protein in their meals when funds allowed: either meat, eggs, tofu or tempeh.

“ One meal a day. They [the mothers] cook one time and they [the children] can eat it all day long. Yes, they can take it all day long. They find that they like [to take the food], because they tend to feel hungry.” – Workshop 6 INDO (Mothers).

“ They shop every day because they don’t have any storage in their house and the other factor is because the husband has a daily wage. They don’t have monthly wage. In the morning, the husband gives the ladies the money and the ladies go to the shop for the food. ” – Workshop 4 INDO (Mothers).

In Kaffrine, the following themes emerged relating to an egg intervention: they were different in content and emphasis to Lombok and contained uniquely local cultural emphases.

Mothers were welcoming of eggs as a supplement to improve their health during pregnancy and acknowledged the importance of good nutrition during pregnancy. However, they also mentioned that their husbands can sometimes be resistant to accepting outside help and provided an example of a vaccination programme in which fathers were hesitant to participate. However, participants stated that the Government should be the source of assistance to them (but currently was not perceived to be so).

“But if these eggs are brought by external bodies, we will hesitate to take it. For example, concerning vaccination some fathers hesitate to vaccinate their children even if they are locals who are doing it. So, educating the fathers to accept this is really a challenge” – Workshop 11 SEN (CHWs).

Some traditional gender roles were found to be strong. The participants emphasised that men are considered the head of the household, as expected in Islam, with the mother as primary caregiver for children. This is reflected in the comments from participants regarding the importance of Islam and living their religious values. The men thus made the family decisions and would need to be informed and agree to any family participation in any intervention – regardless of the education level of the mother. The paternal grandmother also played a very important role in the family and may also make decisions for the family in the place of the father. Community Health Workers emphasised that educating paternal grandmothers was essential to improve access to healthcare for women.

“There are people who are not flexible with their wives and need to be informed. Sometimes the mother-in-law can decide the place of the husband. But still, the husband’s [permission] is still necessary.” – Workshop 1 SEN (CHWs).

“[We recommend] communication with mothers-in-law and the community. Raise awareness through information, emphasizing the well-being of women and children.” – Workshop 1 SEN (CHWs).

“The [grand]mothers take care of the children so that the daughters in-law will take care of them in return So it’s very bad for a daughter in law not to take care of her mother in-law. Society does not like people who distance themselves from children.” – Workshop 4 SEN (grandmothers).

Social hierarchies

In addition to hierarchies relating to gender/position in the family such as grandmothers have decision making power, there was some mention of social hierarchies in Kaffrine, Senegal. For example, during times of food stress it was said that political groups distribute food and elected officials who choose the neighbourhoods in which the food will be distributed. Neighbourhood leaders then decide to whom the food is distributed, meaning there is a feeling that some people are being left out.

“ It’s political groups that come to distribute food or for political purposes…organizations that often come to distribute food aid, but in general it is always subject to a selection on the part of elected officials, in particular the neighbourhood leaders, who select the people they like and who leave the others ” – Workshop 11 SEN (CHWs).

Participants explained that during mealtimes, the family will share food from one large plate from which the father will eat first as a sign of respect and courtesy. Sometimes, children would also eat in their neighbour’s house to encourage them to eat.

“ Yes, it happens that we use that strategy so that children can eat. Note that children like to imitate so that’s why we [send them to the neighbour’s house]” – Workshop 11 SEN (CHWs)”.

Traditional beliefs about malnutrition

In Kaffrine, Senegal, some participants spoke of traditional beliefs relating to malnutrition, which are believed by fewer people these days. For example, uncovered food might attract bad spirits, and any person who eats it will become ill. There were a number of food taboos spoken of which were thought to have negative consequences for the baby, for example watermelon and grilled meat which were though to lead to birth complications and bleeding. Furthermore, cold water was thought to negatively impact the baby. Groups spoke of a tradition known as “bathie” in which traditional healers wash stunted children with smoke.

“ There are traditional practices called (Bathie) which are practiced by traditional healers. Parents are flexible about the practice of Bathie ” – Workshop 1 SEN (CHWs).

Causes of malnutrition and stunting were thought to be a lack of a balanced diet, lack of vitamin A, disease, intestinal worms, poor hygiene, socio-cultural issues such as non-compliance with food taboos, non-compliance with exclusive breastfeeding and close pregnancies. Malnutrition was also thought by some to be hereditary. Numerous signs of malnutrition were well known amongst the groups in Kaffrine. For example, signs of malnutrition were thought to be a big bloated belly, diarrhoea, oedema of the feet, anaemia, small limbs and hair loss as well as other symptoms such as red hair and a pale complexion. Despite this, malnutrition was thought to be hard to identify in Kaffrine as not all children will visit health centres, but mothers do try to take their babies heights and weights monthly. The groups were aware of the effect of poverty on the likelihood of stunting as impoverished parents cannot afford food. Furthermore, the groups mentioned that there is some stigma towards stunted children, and they can face mockery from other children although most local people feel pity and compassion towards them. Malnourished children are referred to as Khiibon or Lonpogne in the local language of Wolof.

“ It is poverty that is at the root of malnutrition, because parents do not have enough money [and] will have difficulty feeding their families well, so it is the situation of poverty that is the first explanatory factor of malnutrition here in Kaffrine” – Workshop 9 SEN (administrators).

“It can happen that some children are the victim of jokes for example of mockery from children of their same age, but not from adults and older ” – Workshop 9 SEN (administrators).

Pregnancy beliefs

In Kaffrine, Senegal, there were concerns around close pregnancies, and pregnancies in women who were too young, and for home births. Within the communities there was a stigma around close pregnancies, which prevented them from attending antenatal appointments. Similarly, there were superstitions around revealing early pregnancies, which again delayed attendance at health centres.

Groups acknowledged the role of good nutrition, and mentioned some forbidden foods such as salty foods, watermelon and grilled meat (which sometimes related back to a traditional belief that negative impacts would be felt in the pregnancy such as birth complications and bleeding). Similarly, drinking cold water was thought to negatively affect the baby. Beneficial foods mentioned included vegetables and meat, during pregnancy.

“ Often when a woman has close pregnancies, she can be ashamed, and this particularly delays the time of consultation” – Workshop 5 SEN (CHWs).

“Yes, there are things that are prohibited for pregnant women like salty foods” – Workshop 11 SEN (CHWs).

In Kaffrine, Senegal, some participants spoke of a traditional belief that if a pregnant woman consumes eggs then her baby might be overweight, or have problems learning how to talk. Despite this, mothers in Kaffrine said that they would be happy to accept eggs as a supplement, although if supplements are provided that require preparation (such as powdered supplements), they would be less likely to accept them.

“These restrictions are traditional, and more women no longer believe that eggs will cause a problem to the child. But if these eggs are brought by external bodies, we will hesitate to take it.” – Workshop 11 SEN (CHWs).

“They don’t eat eggs before the child starts speaking (the child only eats eggs when he starts talking). This is because it’s very heavy and can cause bloating and may also lead to intestinal problems.” – Workshop 4 SEN (grandmothers).

Other important topics – access to health services

For the participants in Kaffrine, Senegal, accessing health services was problematic, particularly for pre- and post-natal appointments, which faced frequent delays. Some women had access due to poor roads and chose to give birth at home. Access issues were further compounded by poverty and social factors, as procedures in hospitals can be costly, and women with close pregnancies (soon after an earlier one) can feel shame from society and hide their pregnancy.

“Women really have problems of lack of finances. There are social services in the hospital; but those services rarely attend to women without finances. Even when a child dies at birth they will require money to do the necessary procedure ” – Workshop 11 SEN (CHWs).

Creation of the culturally-informed protocols

Recommendations that comprise a culturally-informed protocol for intervention design in each locality are given in Table 3 .

The Major Cultural Themes, and specific Egg Intervention Themes drawn out from only 9–11 carefully planned group sessions in each country provided a rich set of recommendations towards a culturally-informed protocol for the localised design of a proposed Egg Intervention for both East Lombok, Indonesia and Kaffrine, Senegal. A culturally-informed protocol designed in this way comprises cultural insights which are worthy of consideration in local intervention design and should guide future stages of engagement and provide a platform from which good rapport and trust can be built between researchers and the community [ 16 ]. For example, in Kaffrine, Senegal, the early involvement of husbands and grandmothers is crucial, which reflects values around shared decision making within families that are noted to be more prevalent in LMICs, in contrast to individualistic values in HICs [ 16 , 39 ]. Similarly, due to strong religious values in both East Lombok, Indonesia and Kaffrine, Senegal, partnerships with Islamic leaders is likely to improve engagement. Past studies show the crucial role that religious leaders can play in determining social acceptability of interventions, particularly around taboo topics such as birth spacing [ 40 ].

The WVIS plus PEX:FGD method demonstrated here produced both broad cultural themes from shared values, which were in a concise and easy-to-understand format which could be readily communicated with the wider Action Against Stunting Hub, as well as life practices relevant to stunting in Kaffrine, Senegal and in East Lombok, Indonesia. Discussions of shared values during the WVIS main workshop provided useful cultural background within each community. PEX:FGD discussion uncovered numerous cultural factors within local life practices that could influence on the Egg Intervention engagement and acceptability. Combining themes from the WVIS workshop and PEX:FGDs allowed for specific recommendations to be made towards a culturally-informed protocol for the design of an Egg Intervention that included both broad cultural themes and specific Intervention insights (Table 3 ). For example, in Kaffrine, Senegal, to know that the husband’s authoritative family decision-making for health care (specific) is rooted in Islamic foundations (wider cultural) points to an Intervention Recommendation within the protocol, involving consultations with Islamic Leaders to lead community awareness targeting fathers. Similarly, in East Lombok, Indonesia the (specific) behaviour of breastfeeding for 2 years was underpinned by (wider cultural) shared values of living in Islam. This understanding of local values could prevent the imposition of culturally misaligned values, which Bernal and Adames (2017) caution against [ 17 ].

There are a number of interesting overlaps between values seen in the WVIS Frameworks and Narratives and the categories of Schwartz (1992) and The World Values Survey (2023) [ 41 , 42 ]. For example, in both Kaffrine, Senegal and East Lombok, Indonesia, strong religious values were found, and the groups spoke of the importance of practicing their religion with daily habits. This would align with traditional and conservation values [ 41 , 43 ]. Furthermore, in Kaffrine, Senegal participants often mentioned the importance of mutual aid within the community, and similar values of togetherness and respect in the community were found in East Lombok, Indonesia. These would seem to align with traditional, survival and conservation values [ 41 , 43 ]. However, the values mentioned by the groups in the WVIS workshops are far more specific, and it is possible that through asking what is most worthwhile, valuable and meaningful about their context, the participants are able to prioritise which aspects of their values are most salient to their daily lives. Grounded shared values such as these are generally neglected in Global Health Research, and values predominant in the Global North are often assumed to be universal [ 14 ]. Thus, by excluding the use of a predefined external framework, we minimized the risk of imposing our own ideas of values in the community, and increased the relevance, significance and local validity of the elicited information [ 28 ].

Participatory methods of engagement are an essential step in conducting Global Health Research but there is currently a paucity of specific guidance for implementing participatory methods in vulnerable communities [ 16 , 44 ]. In addition, there is acknowledgement in the literature that it is necessary to come into communities in LMICs without assumptions about their held values, and to use bottom-up participatory approaches to better understand local values [ 14 , 16 ]. The WVIS plus PEX:FGD methodology highlighted here exemplifies a method that is replicable in multiple country contexts [ 28 , 32 ] and can be used to crystallize local In Situ Shared Values which can be easily communicated to external researchers. Coupled with the specialised FGD (PEX:FGD), values-based perceptions of specific topics (in this case stunting) can be elicited leading to the creation of specific Culture-based recommendations. This therefore takes steps to answer the call by Memon and colleagues (2021) for the creation of cultural protocols ahead of conducting research in order to foster ethical research relationships [ 16 ]. We believe that the potential usefulness of the WVIS approach to guide engagement and inform intervention design is effectively demonstrated in this study and WVIS offers a method of making explicit local values in a novel and valuable way.

However, we acknowledge that our approach has several limitations. It has relied heavily on the local university researchers to debate and decide which participant stakeholder groups should be chosen, and although they did this in the context of the Whole Child approach, it would have been advantageous to have involved cultural researchers with a deeper understanding of cultural structures, to ensure sufficient opportunities for key cultural elements to emerge. This would have in particular strengthened the intervention design derived from the PEX:FGD data. For example, we retrospectively realised that our study could have been improved if grandmothers had been engaged in East Lombok. Understanding this limitation leads to suggestion for further work: to specifically investigate the overlap of this approach with disciplinary studies of culture, where social interactions and structures are taken into account via formal frameworks.

There are more minor limitations to note. For example, the WVIS approach can only be led by a trained and experienced facilitator: not all researchers can do this. A training programme is currently under development that could be made more widely available through online videos and a Handbook. Secondly, although the groups recruited do not need to be representative of the local population, the number recruited should be increased until theoretical saturation is achieved of the themes which emerge, which was not carried out in this study as we focussed on demonstrating the feasibility of the tool. Thirdly, there is a limit to the number of topics that can be explored in the PEX:FGDs within the timeframe of one focus group (depending on the stamina of the participants), and so if a wider range of topics need formative research, then more workshops are needed. Lastly, this work took place in a large, highly collaborative project involving expert researchers from local countries as well as international experts in WVIS : other teams may not have these resources. However, local researchers who train in WVIS could lead on their own (and in this Hub project such training was available).

The need for better understanding, acknowledgement and integration of local culture and shared values is increasing as the field of Global Health Research develops. This study demonstrates that the WVIS plus PEX:FGD shared values approach provides an efficient approach to contextualise and localise interventions, through eliciting and making communicable shared values and local life practices which can be used towards the formation of a culturally-informed protocols. Were this method to be used for intervention design in future, it is possible that more focus should be given to existing social structures and support systems and a greater variety of stakeholders should be engaged. This study thus contributes to the literature on methods to culturally adapt interventions. This could have significant implications for improving the uptake of nutrition interventions to reduce malnutrition through improved social acceptability, which could help progression towards the goal of Zero Hunger set within the SDGs. The transferability and generalisability of the WVIS plus PEX:FGD approach should now be investigated further in more diverse cultures and for providing formative research information for a wider range of research themes. Future studies could also focus on establishing its scaling and pragmatic usefulness as a route to conceptualising mechanisms of social acceptability, for example a mechanism may be that in communities with strong traditional religious values, social hierarchies involving religious leaders and fathers exist and their buy-in to the intervention is crucial to its social acceptability. Studies could also focus on the comparison or combination of WVIS plus PEX:FGD with other qualitative methods used for intervention design and implementation.

Availability of data and materials

The datasets used and/or analysed during the current study are available from the corresponding author on reasonable request [email protected], Orcid number 0000–0002–1811-4597. These include deidentified Frameworks of Shared Values and Accompanying Narrative from each Group; deidentified Hub Insight Statements of relevant themes.

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Acknowledgements

We thank the Hub PI, Claire Heffernan, for feedback on a late draft of the manuscript.

The Action Against Stunting Hub is funded by the Medical Research Council through the UK Research and Innovation (UKRI) Global Challenges Research Fund (GCRF), Grant No.: MR/S01313X/1.

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Values & Sustainability Research Group, School of Architecture, Technology and Engineering, University of Brighton, Brighton, UK

Annabel J. Chapman, Mahsa Firoozmand & Marie K. Harder

Department of Environmental Science and Engineering, Fudan University, Shanghai, People’s Republic of China

Chike C. Ebido, Rahel Neh Tening, Yanyan Huang & Marie K. Harder

Department of Zoology and Environmental Biology, University of Nigeria, Nsukka, Nigeria

Chike C. Ebido

Preventive Medicine and Public Health, Université Cheikh Anta Diop (UCAD), Dakar, Senegal

Ndèye Marème Sougou

Faculty of Psychology, Universitas Islam Negeri Syarif Hidayatullah, Jakarta, Indonesia

Risatianti Kolopaking

Southeast Asian Ministers of Education Organization Regional Centre for Food and Nutrition (SEAMEO RECFON) Universitas Indonesia, Jakarta, Indonesia

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International Research Laboratory (IRL 3189) Environnement santé et sociétés/CNRS/UCAD, Dakar, Senegal

Amadou H. Diallo

Department of Medical Records and Health Information, Faculty of Health and Technology, Universitas Bandung, Bandung, Indonesia

Rita Anggorowati

Laboratory of Cultural Anthropology, IFAN, Université Cheikh Anta Diop (UCAD), Dakar, Senegal

Fatou B. Dial & Cheikh El Hadji Abdoulaye Niang

School of Education, Languages and Linguistics, Faculty of Humanities and Social Sciences, University of Portsmouth, Portsmouth, UK

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Contributions

MKH formulated the initial research question and study design. AJC developed the specific research question. Data collection in Senegal involved CCE, NMS, AHD, FBD, RNT, CEHAN and JM. Data collection in Indonesia involved RA, RK, YH and MKH. Cultural interpretation in Senegal Involved AHD, FBD, NMS, RNT and JM. Analysis involved AJC and MF. AJC and MKH wrote the paper.

Corresponding author

Correspondence to Marie K. Harder .

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The research was conducted in accordance with the Declaration of Helsinki and has been approved by the Ethics Review Board of the University of Brighton, and national ethics committees for research in Indonesia and Senegal. Informed consent was obtained in the local vernacular language, Bahasa, French or Wolof. Participants retained a copy of the informed consent document for reference.

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Chapman, A.J., Ebido, C.C., Tening, R.N. et al. Creating culturally-informed protocols for a stunting intervention using a situated values-based approach ( WeValue InSitu ): a double case study in Indonesia and Senegal. BMC Public Health 24 , 987 (2024). https://doi.org/10.1186/s12889-024-18485-y

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Received : 27 September 2023

Accepted : 29 March 2024

Published : 09 April 2024

DOI : https://doi.org/10.1186/s12889-024-18485-y

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April 9, 2024

U.S. Postal Service Recommends New Prices for July 2024

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WASHINGTON, DC — Today, the U. S. Postal Service filed notice with the Postal Regulatory Commission of mailing services price changes to take effect July 14, 2024. The new rates include a 5-cent increase in the price of a First-Class Mail Forever stamp from 68 cents to 73 cents.

The proposed adjustments, approved by the governors of the Postal Service, would raise mailing services product prices approximately 7.8 percent. If favorably reviewed by the commission, the price changes would include:

The additional-ounce price for single-piece letters increases from 24 cents to 28 cents. The Postal Service is also seeking price adjustments for Special Services products, including Certified Mail and money order fees. Notably, there will be no price increase for Post Office Box rental fees, and the Postal Service will apply a price reduction of 10 percent for postal insurance when mailing an item.

As changes in the mailing and shipping marketplace continue, these price adjustments are needed to achieve the financial stability sought by the organization’s Delivering for America 10-year plan. USPS prices remain among the most affordable in the world.

The commission will review the changes before they are scheduled to take effect. The complete Postal Service price filing, with prices for all products, can be found on the commission’s website under the Daily Listings section . The Mailing Services filing is Docket No. R2024-2. The price tables are also available on the Postal Service’s Postal Explorer website at  pe.usps.com/PriceChange/Index .

Postal Products

Customers may purchase stamps and other philatelic products through the Postal Store at usps.com/shopstamps , by calling 844-737-7826, by mail through USA Philatelic or at Post Office locations nationwide. For officially licensed stamp products, shop the USPS Officially Licensed Collection on Amazon .

The United States Postal Service is an independent federal establishment, mandated to be self-financing and to serve every American community through the affordable, reliable and secure delivery of mail and packages to 167 million addresses six and often seven days a week. Overseen by a bipartisan Board of Governors, the Postal Service is implementing a 10-year transformation plan, Delivering for America , to modernize the postal network, restore long-term financial sustainability, dramatically improve service across all mail and shipping categories, and maintain the organization as one of America’s most valued and trusted brands.

The Postal Service generally receives no tax dollars for operating expenses and relies on the sale of postage, products and services to fund its operations.

For USPS media resources, including broadcast-quality video and audio and photo stills, visit the USPS Newsroom . Follow us on X , formerly known as Twitter; Instagram ; Pinterest ; Threads and LinkedIn . Subscribe to the USPS YouTube Channel and like us on Facebook . For more information about the Postal Service, visit usps.com and facts.usps.com .

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