ACCTMIS 2200 Lecture 12: 12. Time Value of Money Lecture

• School: Ohio State University
• Department: Accounting and Management Info
• Course: ACCTMIS 2200
• Professor: Marc Smith

Document Summary

Measurement and recording of liabilities are based on this concept. Earns interest on both principal invested as well as all previously earned interest. Future value = present value x future value factori,n. Present value = future value x present value factori,n. Future value of an ordinary annuity = payment x future value annuity. To find the future value of an annuity due table factor, multiply the ordinary annuity factor by (1 + i) Present value of an ordinary annuity = payment x present value. To find the present value of an annuity due table factor, multiply the ordinary annuity factor by (1 + i) For each case, a table factor is needed. Need to know two variables to determine factor - number of periods (n), interest rate (i). n is left column, i is the row. The intersection of i and n is the table factor. Unit 3 page 1 (a) future value = present value x fv factor 10%|5.