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

How is the future value of \$500 invested for one year at 6\% annual interest computed?

Future Value = \$500 \times 0.06

Future Value = \$500 - (\$500 \times 0.06)

Future Value = \$500 \div (1 + 0.06)

Future Value = \$500 \times (1 + 0.06)

Previous problemNext problem

Verified step by step guidance

Step 1: Understand the concept of future value. Future value represents the amount of money an investment will grow to after earning interest over a specified period. It is calculated using the formula: Future Value = Present Value × (1 + Interest Rate).

Step 2: Identify the given values in the problem. The present value (initial investment) is $500, the annual interest rate is 6% (or 0.06 in decimal form), and the time period is one year.

Step 3: Substitute the given values into the formula for future value. Using MathML, the formula is:

Future Value = Present Value \times (1 + Interest Rate)

. Replace 'Present Value' with 500 and 'Interest Rate' with 0.06.

Step 4: Perform the addition inside the parentheses first. Add 1 to the interest rate (0.06), resulting in 1.06. This step simplifies the formula to: Future Value = $500 × 1.06.

Step 5: Multiply the present value ($500) by the result of the addition (1.06). This will give the future value of the investment after one year at 6% annual interest.