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

Time Value of Money

1

Time Value of Money Tables:Equations

3m

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2

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

2m

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3

Time Value of Money Table:Present Value of Annuity

1m

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4

Using Time Value of Money Tables

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

Time Value of Money Tables:Bonds Payable

3m

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7

TVM Tables and Bonds Payable

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?