Q. 1. Your 13-year old cousin knows that you are in college and learning corporate finance. She is very interested in knowing about the time value of money and tells you: Cousin, I want to be a millionaire and learn everything about the time value of money. I need you to explain some concepts that I read on the internet, but I dont quite understand. What is compounding and discounting? What is the difference between them? Furthermore, why should I be willing to invest in the promise that I will receive a future payment? Does the answer depend on who is making the promise?"

Answer these questions in your reply to your cousin for your initial post.

Q. 2. Your 13-year old cousin comes to you again to ask more questions about the time value of money (TVM): Hey cousin, I want to learn about annuities, growing annuities, perpetuities, and growing perpetuities. Can you please explain what they are? What are their differences? Also, I wonder how all these TVM techniques can be used in real life. How are these techniques applied in finance? Can you provide examples?