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

The interest rate on a savings account determines:

the amount of interest earned over time

the number of withdrawals allowed per month

the maturity date of the account

the initial deposit required to open the account

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Verified step by step guidance

Understand the concept of an interest rate: The interest rate is the percentage at which money in a savings account grows over time. It is typically expressed annually as the Annual Percentage Rate (APR).

Identify the role of the interest rate: The interest rate directly impacts the amount of interest earned on the principal balance in the account. Higher interest rates result in more earnings over time.

Clarify the unrelated options: The number of withdrawals allowed per month, the maturity date of the account, and the initial deposit required to open the account are not determined by the interest rate. These are typically set by the bank's policies or the type of account.

Relate the interest rate to time: The interest earned is calculated based on the principal amount, the interest rate, and the time the money remains in the account. Use the formula for simple interest:

I = P \times R \times T

, where I is interest, P is principal, R is the interest rate, and T is time.

Conclude the correct answer: The interest rate determines the amount of interest earned over time, as it directly influences the growth of the account balance.