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

Previous problemNext problem

Struggling with Financial Accounting?

Join thousands of students who trust us to help them ace their exams!Watch the first video

Multiple Choice

Using a time value of money table, what is the future value interest factor (FVIF) for an interest rate of 10\% over 2 years?

1.10

1.02

1.21

1.20

Previous problemNext problem

Verified step by step guidance

Understand the concept of Future Value Interest Factor (FVIF): FVIF is a multiplier used to calculate the future value of a sum of money based on a specific interest rate and time period. It is derived from the formula FV = PV × FVIF, where FV is the future value, PV is the present value, and FVIF is the factor.

Identify the formula for FVIF: The formula for FVIF is FVIF = (1 + r)^n, where 'r' is the interest rate (expressed as a decimal) and 'n' is the number of periods.

Substitute the given values into the formula: In this problem, the interest rate (r) is 10%, which is equivalent to 0.10, and the number of years (n) is 2. The formula becomes FVIF = (1 + 0.10)^2.

Simplify the expression: Add 1 to the interest rate to get 1.10, then raise this value to the power of 2. This step involves calculating (1.10)^2.

Use the time value of money table: Locate the FVIF value for an interest rate of 10% over 2 years in the table. This value should match the calculation from the formula.