《Intermediate Accounting, 9th中级会计学 Nikolai》appendix_d.pptVIP

Objectives 1. Understand simple interest and compound interest. 2. Compute and use the future value of a single sum. 3. Compute and use the present value of a single sum. 4. Compute and use the future value of an ordinary annuity. 5. Compute and use the future value of an annuity due. Simple Interest Compound Interest Future Value of a Single Sum at Compound Interest Present Value of a Single Sum Future Value of an Ordinary Annuity Future Value of anAnnuity Due Present Value of anOrdinary Annuity Present Value of an Annuity Due Present Value of a Deferred Ordinary Annuity Future Value of anAnnuity Due So, if $1,000 is deposited annually for four years beginning on December 31, 2004… …a cumulative total of $5,610 can be withdrawn on December 31, 2008. Table Approach Kyle Vasby wants to calculate the present value on January 1, 2004 one period before the first cash flow of four future withdrawals cash flows of $1,000 each, with the first withdrawal being made on December 31, 2004. Assume again an interest rate of 14%. $1,000 $1,000 $1,000 $1,000 Dec. 31, 2004 Dec. 31, 2005 Dec. 31, 2006 Dec. 31, 2007 Present Value of anOrdinary Annuity Go to Table 4, the present value of an ordinary annuity of 1. Read the table value for n equals 4 and i equals 14%. Present Value of anOrdinary Annuity Table Approach n 8.0% 9.0% 10.0% 12.0% 14.0% 16.0% 1 0.925926 0.917431 0.909091 0.892857 0.877193 0.862069 2 1.783265 1.759111 1.735537 1.690051 1.646661 1.605232 3 2.577097 2.531295 2.486852 2.401831 2.321632 2.245890 4 3.312127 3.239720 3.169865 3.037349 2.913712 2.798181 5 3.992710 3.889651 3.790787 3.604776 3.433081 3.274294 6 4.622880 4.485919 4.355261 4.111407 3.888668 3.684736 2.913712 Present Value of anOrdinary Annuity Table Approach One thousand dollars times 2.913713 equals $2,913.71. So, the present value of this ordinary annuity is $2,913.71. Table Approach Barbara Livingston wants to calculate the present value of an annuity on December 31, 2004, whi