Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

10. Time Value of Money

Time Value of Money Equations

Financial Accounting

10. Time Value of Money

Time Value of Money Equations

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Multiple Choice

The value today of receiving an amount in the future is referred to as the:

Present value

Annuity

Future value

Compound interest

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Verified step by step guidance

Understand the concept of 'Present Value': Present value refers to the current worth of a future sum of money or stream of cash flows, given a specified rate of return. It accounts for the time value of money, which states that money available today is worth more than the same amount in the future due to its earning potential.

Review the definition of 'Annuity': An annuity is a series of equal payments made at regular intervals over a specified period. It is not the same as present value, but annuities can be evaluated using present value calculations.

Understand 'Future Value': Future value is the value of a current asset at a future date based on an assumed rate of growth or interest. It is the opposite of present value, as it calculates the worth of money in the future rather than today.

Learn about 'Compound Interest': Compound interest is the process of earning interest on both the principal amount and the accumulated interest from previous periods. While it influences the calculation of present value, it is not the same concept.

Conclude that the correct term for the value today of receiving an amount in the future is 'Present Value', as it directly addresses the time value of money and discounts future cash flows to their current worth.