财务会计概念与应用英文版Lecture 10.pptVIP

Chapter 10 Long-Term Debt Financing Present Values The value today of $1 to be received or paid in the future, given a specified interest rate. $90.91 is the present value of $100 received in one year. Future Values The value in the future of $1 to be received or paid today, given a specified interest rate. $100 is the future value in one year of $90.91 paid or invested today. Computing Present Values Using present value tables (Table I): Choose the time period and interest rate used. Multiply the factor by the amount to be received in the future. Computing Future Values Using future value tables (Table III): Choose the time period and interest rate used. Multiply the factor by the amount invested today. Annuities A series of equal amounts to be received or paid at the end of equal time periods. Present values or future values can be computed for annuities. Use number of periods and rate to find appropriate factor. Multiply the factor by the annuity (payment) amount. Notes Payable Long-term debt that is paid back at the end of the loan term. Interest is usually paid throughout the loan period. Mortgages A written promise to pay a stated amount of money. Secured by the pledging of certain assets. Liability recorded on the balance sheet is the amount borrowed (which is also the present value of the future payments). Mortgage Amortization Part of each mortgage payment pays off interest due and part of the payment reduces the principal amount due. A schedule can be prepared showing the portions of each payment that are principal and interest. Mortgage Amortization Leases Capital leases Asset and obligation reported on the balance sheet are the present value of the future lease payments. Yearly interest expense based off of remaining lease liability balance (like mortgage amortization). Bonds Bond A contract between the borrowing company (issuer) and the lender (investor) in which the borrower promises to pay a specified amount of intere