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Time Value Money (TVM) problems, also known as Present and Future Value problems, are
where cash is received or paid at various times with the goal being to restate all the cash flows into one
particular time period equivalency. Our basic assumption is that cash today can be invested and as a
result will grow to a larger sum later (future value problems). Therefore the reverse is also assumed. Cash
at later dates is equal to the cash invested earlier plus interest, therefore, in order to restate the future
cash flows into earlier cash equivalents the interest portion must be taken out (present value problems).
n=3 i=10% table factor
Timeline visualization: table factor is always
1000
FvAmt ? 1.3310 > 1.000
1000 1000 1000
FvAo ? 3.3100 > number of rents
1000
PvAmt ? .7513 < 1.0000
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This note was uploaded on 04/03/2012 for the course ACCT 272 taught by Professor Mensah during the Fall '08 term at Rutgers.
 Fall '08
 MENSAH
 Financial Accounting

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