Financial Accounting

Learn the toughest concepts covered in your Financial Accounting class with step-by-step video tutorials and practice problems.

Time Value of Money

Time Value of Money Equations

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1

concept

Time Value of Money and Using Timelines

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concept

Time Value of Money Equation:Future Value

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3
Problem

The formula FV = PV * (1 + r)n is best used for:

4
Problem

You invest $4,545 in Clutch Bank today earning a juicy 10% annual interest. What is the value of your investment in one year? What is the value of the investment after two years?

5
Problem

The formula PV = FV (1 + r)n is best used for:

6
Problem

You are saving up $12,000 for a luxurious European vacation two years from now. How much money would you need to invest today at Clutch Bank, earning their juicy 10% annual interest, to have enough for your vacation? How much would you need to invest today, if instead you could only earn 6% interest?

7

example

Time Value of Money

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8

concept

Annuity

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9
Problem

Today, you purchased a $1,000 bond that matures in 5 years. The bond pays annual interest of 10%. Visualize these cash flows on a timeline.