Prof Maur

• Find the following values for a lump sum assuming annual compounding:
  • The future value of $500 invested at 8 percent for 1 year
  • The future value of $500 invested at 8 percent for 5 years
  • The present value of $500 to be received in 1 year when the opportunity cost rate is 8 percent
  • The present value of $500 to be received in 5 years when the opportunity cost rate is 8 percent
• Discuss present and future values and their implications for the balance sheet and the budget of an organization.

Review Understanding The Time Value of Money to attain more information on how the value of money is based on time.