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

What is the value in year 10 of a \$1,000 cash flow made in year 3 if interest rates are 9\% compounded annually?

$1,478.57

$1,936.70

$1,828.04

$1,700.00

Previous problemNext problem

Verified step by step guidance

Step 1: Understand the problem. You are tasked with finding the future value (FV) of a cash flow of $1,000 made in year 3, projected to year 10, using an annual interest rate of 9%. The formula for future value is FV = PV × (1 + r)^n, where PV is the present value, r is the interest rate, and n is the number of years.

Step 2: Identify the variables. In this case, PV (present value) is $1,000, r (interest rate) is 9% or 0.09, and n (number of years) is the difference between year 10 and year 3, which is 7 years.

Step 3: Substitute the values into the formula. Using MathML, the formula becomes:

FV = PV \times (1 + r)^{n}

. Replace PV with 1000, r with 0.09, and n with 7.

Step 4: Perform the calculation step-by-step. First, calculate (1 + r), which is (1 + 0.09) = 1.09. Then, raise 1.09 to the power of 7 (1.09^7). Finally, multiply the result by 1,000 to find the future value.

Step 5: Interpret the result. The future value represents the amount of money the $1,000 cash flow will grow to by year 10, given the annual compounding interest rate of 9%.