{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

_05_APP_3_MOODLE_PowerPoint_Slides_ACC_210_--_Day_1_TVM_A3

_05_APP_3_MOODLE_PowerPoint_Slides_ACC_210_--_Day_1_TVM_A3...

Info iconThis preview shows pages 1–5. Sign up to view the full content.

View Full Document Right Arrow Icon
ACC210 – Spring 2011 “Time Value of Money” Appendix 3 Christopher T. McKittrick CPA, MBA, CFE
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Appendix 3 – Objectives Describe the difference between simple and compound interest Describe the meaning of the future value of an amount (FV) and the future value of an ordinary annuity (FVA) Describe the meaning of the present value of an amount (PV) and the present value of an ordinary annuity (PVA) Describe the relationship between the present value of an amount (PV) and the future value of an amount (FV) Calculate the future value and present value of an investment
Background image of page 2
The Rule of 72 A rule that states in order to find the number of years required to double your money at a given interest rate, you divide the compound interest rate into 72. The result is the approximate number of years that it will take for your investment to double . For example: $1 invested at 10% would take 7.2 years ((72/10) = 7.2) to turn into $2. In reality, a 10% investment will take 7.3 years to double ((1.10^7.3 = 2). Albert Einstein is often credited with discovering the compound interest Rule of 72. Referring to compound interest, Albert Einstein is quoted as saying: "It is the greatest mathematical discovery of all time“.
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Time Value Of Money “Definitons\” A dollar on hand today is worth more than a dollar to be received in the future The dollar on hand today can be invested to earn interest to yield more than a dollar in the future . This, of course, depends upon the rate of return or interest rate which can be earned on the investment.
Background image of page 4
Image of page 5
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}