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Wild, Shaw & Chiappetta: Fundamental Accounting Principles, 23rd Edition
B-1
APPENDIX B
TIME VALUE OF MONEY
Related Assignment Materials
Student Learning Objectives
Quick Studies*
Exercises*
Conceptual objectives:
C1. Describe the earning of interest
and the concepts of present and
future values.
B-1
B-11, B-19
Procedural objectives:
P1. Apply present value concepts
to a single amount by using
interest tables.
P2. Apply future value concepts to
a single amount by using
interest tables.
B-5
B-3, B-4, B-5, B-6, B-17, B-18, B-19
to an annuity by using interest
tables.
B-18, B-19
P4. Apply future value concepts to
an annuity by using interest
tables.
B-7
B-14, B-15, B-16, B-17, B-18, B-19
*See additional information on next page that pertains to these quick studies, exercises and problems.
Wild, Shaw & Chiappetta: Fundamental Accounting Principles, 23rd Edition
B-2
Additional Information on Related Assignment Material
Connect
Available on the instructor’s course-specific website) repeats all numerical Quick Studies, all Exercises and
Problems Set A. Connect also provides algorithmic versions for Quick Study, Exercises and Problems. It allows
instructors to monitor, promote, and assess student learning. It can be used in practice, homework, or exam mode.
Connect Insight
The first and only analytics tool of its kind, Connect Insight is a series of visual data displays that are each framed
by an intuitive question and provide at-a-glance information regarding how an instructor’s class is performing.
Connect Insight is available through Connect titles.
The Serial Problem for Success Systems continues in this chapter.
General Ledger
Assignable within Connect, General Ledger (GL) problems offer students the ability to see how transactions post
from the general journal all the way through the financial statements. Critical thinking and analysis components are
added to each GL problem to ensure understanding of the entire process. GL problems are auto-graded and provide
instant feedback to the student.
Excel Simulations
Assignable within Connect, Excel Simulations allow students to practice their Excel skills—such as basic formulas
and formatting—within the context of accounting. These questions feature animated, narrated Help and Show Me
tutorials (when enabled). Excel Simulations are auto-graded and provide instant feedback to the student.
Synopsis of Chapter Revision
New organization with detailed subheadings.
Added Excel computation for PV and FV calculations.
Added Excel computation for PV and FV of annuity calculations.
Wild, Shaw & Chiappetta: Fundamental Accounting Principles, 23rd Edition
B-3
Appendix Outline
I. Present and Future Value Concepts
A. As time passes, the values of our assets and liabilities change.
B. Change is due to interest.
II. Present Value of a Single Amount
A. The present value of a single amount received at a future date is
the amount that can be invested now at the specified interest rate
to yield that future value.
B. A table of present values for a single amount shows the present
values of $1 for a variety of interest rates and a variety of time
periods that will pass before the $1 is received.
II. Future Value of a Single Amount
A. The future value of a single amount invested at a specified rate of
interest is the amount that would accumulate by the future date.
B. A table of future values of a single amount shows the future values
of $1 invested now at a variety of interest rates for a variety of
time periods.
III. Present Value of an Annuity
A. An ordinary annuity is defined as equal end-of-period payments at
equal intervals.
B. The present value of an annuity is the amount that can be invested
IV. Future Value of an Annuity
A. The future value of an annuity invested at a specified rate of
interest is the amount that would accumulate by the date of the
final payment.
Notes
Wild, Shaw & Chiappetta: Fundamental Accounting Principles, 23rd Edition
B-4
Appendix B Alternate Demonstration Problem
Sarah Blue has the three options:
2. Receiving $6,000 in cash immediately or
Assuming that the current interest rate is 10%, and that Blue wants the
option that yields the highest present value, which option should she
choose?
Wild, Shaw & Chiappetta: Fundamental Accounting Principles, 23rd Edition
Appendix B Solution: Alternate Demonstration Problem
The present value of $1,000 received annually for 10 years discounted at
10% equals $6,145.
