Topic 7: Compute the Time Value of Money
Reference: Kimmel, Paul. D., Weygandt, Jerry. J. & Kieso, Donald. E. (2006). Financial
Accounting: Tools for Business Decision Making (4th ed.). Hoboken, NJ: John Wiley &
Sons. Used with permis
a discount rate of 10%, the present value factor is .82645, which equals the $826.45
($1,000 .82645) computed previously.
Note that a higher discount rate produces a smaller present value. For example, using a
15% discount rate, the present value of $1,00
Illustration 5 Demonstration problemUsing Table 1 for FV of 1
The preceding discussion involved the accumulation of only a single principal sum.
Individuals and businesses frequently encounter situations in which a series of equal dollar
amounts are to be