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2. Using Boundless Presentations The Appendix The appendix is for you to use to add depth and breadth to your lectures. You can simply drag and drop slides from the appendix into the main presentation to make for a richer lecture experience. Free to edit, share, and copy Feel free to edit, share, and make as many copies of the Boundless presentations as you like. We encourage you to take these presentations and make them your own. Free to share, print, make copies and changes. Get yours at www.boundless.com Boundless Teaching Platform Boundless empowers educators to engage their students with affordable, customizable textbooks and intuitive teaching tools. The free Boundless Teaching Platform gives educators the ability to customize textbooks in more than 20 subjects that align to hundreds of popular titles. Get started by using high quality Boundless books, or make switching to our platform easier by building from Boundless content pre-organized to match the assigned textbook. This platform gives educators the tools they need to assign readings and assessments, monitor student activity, and lead their classes with pre-made teaching resources. Get started now at: If you have any questions or problems please email: educators@boundless.com http://boundless.com/teaching-platform

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4. Multi-Period Investment Approaches to Calculating Future Value Calculating Future Value Single-Period Investment Future Value, Single Amount The Time Value of Money > Future Value, Single Amount Free to share, print, make copies and changes. Get yours at www.boundless.com www.boundless.com/accounting?campaign_content=book_378_section_66&campaign_term=Accounting&utm_campaign=powerpoint&utm_medi um=direct&utm_source=boundless

5. Investments that accrue simple interest have interest paid based on the amount of the principal, not the balance in the account. Investments that accrue compound interest have interest paid on the balance of the account. This means that interest is paid on interest earned in previous periods. Simple interest increases the balance linearly, while compound interest increases it exponentially. Multi-Period Investment Free to share, print, make copies and changes. Get yours at www.boundless.com www.boundless.com/accounting/textbooks/boundless-accounting-textbook/the-time-value-of-money-10/future-value-single-amount-66/multi- period-investment-307- 1540?campaign_content=book_378_section_66&campaign_term=Accounting&utm_campaign=powerpoint&utm_medium=direct&utm_source=bou ndless Simple Interest Formula View on Boundless.com The Time Value of Money > Future Value, Single Amount

6. The "present" can be moved based on whatever makes the problem easiest. Just remember that moving the date of the present also changes the number of periods until the future for the FV. To find FV, you must first identify PV, the interest rate, and the number of periods from the present to the future. The interest rate and the number of periods must have consistent units. If one period is one year, the interest rate must be X% per year, and vis versa. Approaches to Calculating Future Value Free to share, print, make copies and changes. Get yours at www.boundless.com www.boundless.com/accounting/textbooks/boundless-accounting-textbook/the-time-value-of-money-10/future-value-single-amount- 66/approaches-to-calculating-future-value-308- 3889?campaign_content=book_378_section_66&campaign_term=Accounting&utm_campaign=powerpoint&utm_medium=direct&utm_source=bou ndless Compound Interest View on Boundless.com The Time Value of Money > Future Value, Single Amount

7. The future value is the value of a given amount of money at a certain point in the future if it earns a rate of interest. The future value of a present value is calculated by plugging the present value, interest rate, and number of periods into one of two equations. Unless otherwise noted, it is safe to assume that interest compounds and is not simple interest. Calculating Future Value Free to share, print, make copies and changes. Get yours at www.boundless.com www.boundless.com/accounting/textbooks/boundless-accounting-textbook/the-time-value-of-money-10/future-value-single-amount-66/calculating- future-value-309- 1276?campaign_content=book_378_section_66&campaign_term=Accounting&utm_campaign=powerpoint&utm_medium=direct&utm_source=bou ndless Compound Interest View on Boundless.com The Time Value of Money > Future Value, Single Amount

8. Single-period investments use a specified way of calculating future and present value. Single-period investments take place over one period (usually one year). In a single-period investment, you only need to know two of the three variables PV, FV, and i. The number of periods is implied as one since it is a single-period. Single-Period Investment Free to share, print, make copies and changes. Get yours at www.boundless.com www.boundless.com/accounting/textbooks/boundless-accounting-textbook/the-time-value-of-money-10/future-value-single-amount-66/single- period-investment-310- 876?campaign_content=book_378_section_66&campaign_term=Accounting&utm_campaign=powerpoint&utm_medium=direct&utm_source=boun dless View on Boundless.com The Time Value of Money > Future Value, Single Amount

9. Free to share, print, make copies and changes. Get yours at www.boundless.com Appendix

10. Key terms accrue To add, or grow. compound interest Interest, as on a loan or a bank account, that is calculated on the total on the principal plus accumulated unpaid interest. Multi-period investment An investment that takes place over more than one periods. Periods (t or n) Units of time. Usually one year. principal The money originally invested or loaned, on which basis interest and returns are calculated. quarter A period of three consecutive months (1/4 of a year). Single-period investment An investment that takes place over one period, usually one year. Free to share, print, make copies and changes. Get yours at www.boundless.com The Time Value of Money

11. Simple Interest Formula Simple interest is when interest is only paid on the amount you originally invested (the principal). You don't earn interest on interest you previously earned. Free to share, print, make copies and changes. Get yours at www.boundless.com Wikipedia. "Future value." GNU FDL http://en.wikipedia.org/wiki/Future_value View on Boundless.comGNU FDLhttp://en.wikipedia.org/wiki/Future_valueView on Boundless.com The Time Value of Money

12. Compound Interest Interest is paid at the total amount in the account, which may include interest earned in previous periods. Free to share, print, make copies and changes. Get yours at www.boundless.com Wikipedia. "Future value." GNU FDL http://en.wikipedia.org/wiki/Future_value View on Boundless.comGNU FDLhttp://en.wikipedia.org/wiki/Future_valueView on Boundless.com The Time Value of Money

13. Compound Interest Interest is paid at the total amount in the account, which may include interest earned in previous periods. Free to share, print, make copies and changes. Get yours at www.boundless.com Wikipedia. "Future value." GNU FDL http://en.wikipedia.org/wiki/Future_value View on Boundless.comGNU FDLhttp://en.wikipedia.org/wiki/Future_valueView on Boundless.com The Time Value of Money

14. Simple Interest Formula Simple interest is when interest is only paid on the amount you originally invested (the principal). You don't earn interest on interest you previously earned. Free to share, print, make copies and changes. Get yours at www.boundless.com Wikipedia. "Future value." GNU FDL http://en.wikipedia.org/wiki/Future_value View on Boundless.comGNU FDLhttp://en.wikipedia.org/wiki/Future_valueView on Boundless.com The Time Value of Money

15. Simple Interest Formula Simple interest is when interest is only paid on the amount you originally invested (the principal). You don't earn interest on interest you previously earned. Free to share, print, make copies and changes. Get yours at www.boundless.com Wikipedia. "Future value." GNU FDL http://en.wikipedia.org/wiki/Future_value View on Boundless.comGNU FDLhttp://en.wikipedia.org/wiki/Future_valueView on Boundless.com The Time Value of Money

16. Compound Interest Interest is paid at the total amount in the account, which may include interest earned in previous periods. Free to share, print, make copies and changes. Get yours at www.boundless.com Wikipedia. "Future value." GNU FDL http://en.wikipedia.org/wiki/Future_value View on Boundless.comGNU FDLhttp://en.wikipedia.org/wiki/Future_valueView on Boundless.com The Time Value of Money

17. Free to share, print, make copies and changes. Get yours at www.boundless.com The Time Value of Money You plan to invest $100,000 in a 3 year Certificate of Deposit that has a 5% compound interest rate. What is its future value? A) $115,000 B) $115,763 C) $105,000 D) $115,927

18. Free to share, print, make copies and changes. Get yours at www.boundless.comwww.boundless.com Boundless - LO. "Boundless." CC BY-SA 3.0 http://www.boundless.com/CC BY-SA 3.0http://www.boundless.com/ The Time Value of Money You plan to invest $100,000 in a 3 year Certificate of Deposit that has a 5% compound interest rate. What is its future value? A) $115,000 B) $115,763 C) $105,000 D) $115,927

19. Free to share, print, make copies and changes. Get yours at www.boundless.com The Time Value of Money You plan to invest $100,000 in a 3 year Certificate of Deposit that has a simple interest rate of 5%. What is its future value? A) $115,763 B) $105,000 C) $115,927 D) $115,000

20. Free to share, print, make copies and changes. Get yours at www.boundless.comwww.boundless.com Boundless - LO. "Boundless." CC BY-SA 3.0 http://www.boundless.com/CC BY-SA 3.0http://www.boundless.com/ The Time Value of Money You plan to invest $100,000 in a 3 year Certificate of Deposit that has a simple interest rate of 5%. What is its future value? A) $115,763 B) $105,000 C) $115,927 D) $115,000

21. Free to share, print, make copies and changes. Get yours at www.boundless.com The Time Value of Money The future value concept answers which of the following questions? A) How much money will you have in 10 years if you invest $10,000 today earning 10% as interest every year? B) All of these answers C) How much money will you have in 10 years if you invest $10,000 every year at 10% interest every year? D) How much money will you have in 10 years if you invest $10,000 every year at 10% net return?

22. Free to share, print, make copies and changes. Get yours at www.boundless.comwww.boundless.com Saylor OER. "Business Administration « Saylor.org – Free Online Courses Built by Professors." CC BY 3.0 http://www.saylor.org/majors/Business/ CC BY 3.0http://www.saylor.org/majors/Business/ The Time Value of Money The future value concept answers which of the following questions? A) How much money will you have in 10 years if you invest $10,000 today earning 10% as interest every year? B) All of these answers C) How much money will you have in 10 years if you invest $10,000 every year at 10% interest every year? D) How much money will you have in 10 years if you invest $10,000 every year at 10% net return?

23. Free to share, print, make copies and changes. Get yours at www.boundless.com The Time Value of Money A period of three consecutive months (1/4 of a year). A) Discounting B) perpetuity C) annuity D) quarter

24. Free to share, print, make copies and changes. Get yours at www.boundless.comwww.boundless.com Boundless Learning. "Boundless." CC BY-SA 3.0 http://www.boundless.com/CC BY-SA 3.0http://www.boundless.com/ The Time Value of Money A period of three consecutive months (1/4 of a year). A) Discounting B) perpetuity C) annuity D) quarter

25. Free to share, print, make copies and changes. Get yours at www.boundless.com The Time Value of Money You decide to make an investment on a bond that pays 5% interest on the principal only. Which of the following describes how interest accrues on this investment? A) Compound interest. B) Simple interest. C) Incepted interest. D) All of these answers.

26. Free to share, print, make copies and changes. Get yours at www.boundless.comwww.boundless.com Boundless - LO. "Boundless." CC BY-SA 3.0 http://www.boundless.com/CC BY-SA 3.0http://www.boundless.com/ The Time Value of Money You decide to make an investment on a bond that pays 5% interest on the principal only. Which of the following describes how interest accrues on this investment? A) Compound interest. B) Simple interest. C) Incepted interest. D) All of these answers.

27. Free to share, print, make copies and changes. Get yours at www.boundless.com The Time Value of Money Which of the following is the correct formula for calculating future value with simple interest? A) FV = PV * (1+i)t B) FV = PV * i C) All of these answers D) FV = PV * (1+i*t)

28. Free to share, print, make copies and changes. Get yours at www.boundless.comwww.boundless.com Boundless - LO. "Boundless." CC BY-SA 3.0 http://www.boundless.com/CC BY-SA 3.0http://www.boundless.com/ The Time Value of Money Which of the following is the correct formula for calculating future value with simple interest? A) FV = PV * (1+i)t B) FV = PV * i C) All of these answers D) FV = PV * (1+i*t)

29. Free to share, print, make copies and changes. Get yours at www.boundless.com The Time Value of Money What is the future value in 30 years of $100,000 invested today in a savings account earning a 1% simple interest rate every year (rounded up to the nearest dollar)? A) 30,000 B) 130,000 C) 134,785 D) More than $134,785

30. Free to share, print, make copies and changes. Get yours at www.boundless.comwww.boundless.com Saylor OER. "Business Administration « Saylor.org – Free Online Courses Built by Professors." CC BY 3.0 http://www.saylor.org/majors/Business/ CC BY 3.0http://www.saylor.org/majors/Business/ The Time Value of Money What is the future value in 30 years of $100,000 invested today in a savings account earning a 1% simple interest rate every year (rounded up to the nearest dollar)? A) 30,000 B) 130,000 C) 134,785 D) More than $134,785

31. Free to share, print, make copies and changes. Get yours at www.boundless.com The Time Value of Money You have $300,000 that you want to invest in a one year Certificate of Deposit (CD) with a 4% annual interest rate. What will be the value of that CD in a year? A) $420,000 B) $301,200 C) $312,000 D) $315,000

32. Free to share, print, make copies and changes. Get yours at www.boundless.comwww.boundless.com Boundless - LO. "Boundless." CC BY-SA 3.0 http://www.boundless.com/CC BY-SA 3.0http://www.boundless.com/ The Time Value of Money You have $300,000 that you want to invest in a one year Certificate of Deposit (CD) with a 4% annual interest rate. What will be the value of that CD in a year? A) $420,000 B) $301,200 C) $312,000 D) $315,000

33. Free to share, print, make copies and changes. Get yours at www.boundless.com The Time Value of Money What is the future value in 30 years of $100,000 invested today in a savings account earning a 1% compound interest rate every year (rounded up to the nearest dollar)? A) 30000 B) 130000 C) 134785 D) More than $134785

34. Free to share, print, make copies and changes. Get yours at www.boundless.comwww.boundless.com Saylor OER. "Business Administration « Saylor.org – Free Online Courses Built by Professors." CC BY 3.0 http://www.saylor.org/majors/Business/CC BY 3.0http://www.saylor.org/majors/Business/ The Time Value of Money What is the future value in 30 years of $100,000 invested today in a savings account earning a 1% compound interest rate every year (rounded up to the nearest dollar)? A) 30000 B) 130000 C) 134785 D) More than $134785

35. Attribution Wikipedia. "Future value." CC BY-SA 3.0 http://en.wikipedia.org/wiki/Future_valueCC BY-SA 3.0http://en.wikipedia.org/wiki/Future_value Boundless Learning. "Boundless." CC BY-SA 3.0 http://www.boundless.com//finance/definition/multi-period-investmentCC BY-SA 3.0http://www.boundless.com//finance/definition/multi-period-investment Boundless Learning. "Boundless." CC BY-SA 3.0 http://www.boundless.com//finance/definition/single-period-investmentCC BY-SA 3.0http://www.boundless.com//finance/definition/single-period-investment Boundless Learning. "Boundless." CC BY-SA 3.0 http://www.boundless.com//finance/definition/periods-t-or-nCC BY-SA 3.0http://www.boundless.com//finance/definition/periods-t-or-n Wikipedia. "Future value." CC BY-SA 3.0 http://en.wikipedia.org/wiki/Future_valueCC BY-SA 3.0http://en.wikipedia.org/wiki/Future_value Wikipedia. "Future value." CC BY-SA 3.0 http://en.wikipedia.org/wiki/Future_valueCC BY-SA 3.0http://en.wikipedia.org/wiki/Future_value Wiktionary. "compound interest." CC BY-SA 3.0 http://en.wiktionary.org/wiki/compound+interestCC BY-SA 3.0http://en.wiktionary.org/wiki/compound+interest Wikipedia. "Future value." CC BY-SA 3.0 http://en.wikipedia.org/wiki/Future_valueCC BY-SA 3.0http://en.wikipedia.org/wiki/Future_value Wiktionary. "accrue." CC BY-SA 3.0 http://en.wiktionary.org/wiki/accrueCC BY-SA 3.0http://en.wiktionary.org/wiki/accrue Wiktionary. "principal." CC BY-SA 3.0 http://en.wiktionary.org/wiki/principalCC BY-SA 3.0http://en.wiktionary.org/wiki/principal Wikipedia. "Future value." CC BY-SA 3.0 http://en.wikipedia.org/wiki/Future_valueCC BY-SA 3.0http://en.wikipedia.org/wiki/Future_value Wiktionary. "quarter." CC BY-SA 3.0 http://en.wiktionary.org/wiki/quarterCC BY-SA 3.0http://en.wiktionary.org/wiki/quarter Free to share, print, make copies and changes. Get yours at www.boundless.com The Time Value of Money