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

If $1 is compounded semiannually for 5 years at an annual interest rate of 2%, how many compounding periods will there be in total?

20 periods

5 periods

2 periods

10 periods

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Verified step by step guidance

Understand the concept of compounding: Compounding occurs when interest is calculated and added to the principal at regular intervals. In this case, the compounding is semiannual, meaning twice a year.

Determine the number of compounding periods per year: Since the compounding is semiannual, there are 2 compounding periods in one year.

Identify the total duration of the investment: The investment lasts for 5 years.

Calculate the total number of compounding periods: Multiply the number of compounding periods per year (2) by the total number of years (5). Use the formula: $ \text{Total Compounding Periods} = \text{Compounding Periods per Year} \times \text{Number of Years} $.

Verify the calculation: Ensure that the multiplication is correct and matches the expected result of 10 compounding periods.