On the benefits of a mathematical solutions approach to time value of money instruction: arguments and evidence

This paper proposes several educational benefits to be derived by abandoning the traditional textbook focus on time value of money (TVM) tables and requiring student-generated mathematical solutions to TVM problems. These include: (1) greater reinforcement and appreciation for the theoretical concep...

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Bibliographic Details
Published in:Journal of accounting education 2003-07, Vol.21 (3), p.239-260
Main Author: Dempsey, Stephen J.
Format: Article
Language:English
Subjects:
Accounting
Achievement tests
Education
Educational Benefits
Instruction
Instructional Effectiveness
Learning
Mathematical Aptitude
Methods
Pedagogy
Studies
Time value of money (TVM)
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Summary:This paper proposes several educational benefits to be derived by abandoning the traditional textbook focus on time value of money (TVM) tables and requiring student-generated mathematical solutions to TVM problems. These include: (1) greater reinforcement and appreciation for the theoretical concepts underlying TVM analysis; (2) improved professional preparation for dealing with real-life TVM applications; and (3) a better backdrop from which to introduce more sophisticated TVM topics calling for a requisite mathematical understanding (e.g., effective interest rates and exponential growth between discrete interest periods). Comparative computational efficiency and learning effectiveness are empirically evaluated in an experiment on two groups of students: those who reinforced their learning using a mathematical approach and those who reinforced their learning using tables. Students that employed the mathematical approach scored significantly higher on a common achievement test and also completed the tests in significantly less time. A post-experimental attitudinal questionnaire revealed statistically significantly stronger student preferences for the mathematical approach.
ISSN:0748-5751
1873-1996
DOI:10.1016/S0748-5751(03)00023-X