Time Value of Money

#5 Time Value of Money (TVM) ( Professor follow up response to my post)

There is definitely “a bird in the hand is worth two in the bush” characteristic of money, that’s for sure. How do you think the TVM concept relates to the accounting world?

#7 Nature of Interest (Professor follow up response to student post)

Thank you for the details around interest and compound interest. How does interest factor into the Time Value of Money discussion? How is it used in the calculation of PV and FV?

#8 Single-Sum Problems ( Student Post)

Future value- known as a single sum of money that is invested now for a certain number or periods at a certain interest rate. When solving accumulate all cash flows to future point. Interest increases the amounts of values over time so future value exceeds present value

Present value- known as a single sum of money in the future that is discontinued for a certain number of periods at a certain interest rate. When solving discount all cash flows from future to present. Discounting reduces amounts or values to present value is less than future amount.

Formula= Future value FV= PV

FV= future value

PV= present value (principal or single sum)

= future value factor for n periods at i interest

Solution preview for the order on time value of money

APA

391 words