Table of contents

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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

Which formula below represents a present value factor?

$1 - (1 + r)^{-n}$

$\dfrac{1}{(1 + r)^n}$

$\dfrac{FV}{PV}$

$(1 + r)^n$

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Verified step by step guidance

Understand the concept of present value factor: It is used to calculate the present value of a future amount of money, considering a specific interest rate and time period.

Identify the correct formula for the present value factor. The formula is typically expressed as:

\frac{1}{{(1 + r)}^{n}}

, where 'r' is the interest rate and 'n' is the number of periods.

Compare the given formulas to the standard present value factor formula. The correct formula matches

\frac{1}{{(1 + r)}^{n}}

Eliminate incorrect options: $1 - (1 + r)^{-n}$ is not the correct formula for present value factor, as it does not represent the division of 1 by the compounded interest factor. Similarly,