A Case For Using Consumer Debt To Teach Present Value And Accounting Concepts

Abstract

Time value of money concepts are one of the most important subjects in business education. Often these concepts are taught in conjunction with bond accounting, which is not immediately relevant for most students. This paper presents a handout to supplement the bond accounting chapter in introductory financial accounting with consumer debt examples. The topics include automobile loans and leases and home mortgages; personal economic decisions that nearly all students will encounter. The paper suggests that the use of consumer debt examples may enhance students’ learning of time value of money.