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

Using Time Value of Money Tables

1

concept

Time Value of Money Tables:Equations

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3m
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2

concept

Time Value of Money Table:Present Value of Lump-Sum

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2m
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3

concept

Time Value of Money Table:Present Value of Annuity

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1m
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4

example

Using Time Value of Money Tables

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8m
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5
Problem

You have won the lottery! You are given two options for your payout:

1. You can receive $540,000 today

2. You can receive $50,000 annually each year for the next twenty years

Assuming the interest rate is 6%, which is the better option?

6

concept

Time Value of Money Tables:Bonds Payable

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3m
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7

example

TVM Tables and Bonds Payable

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12m
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8
Problem

ABC Company issues 1,000 bonds with a face value of $1,000 maturing in eight years. The bonds pay 8% interest semi-annually and the current market rate of interest is 12%. What is the total amount of cash received from the bond issuance?