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Problem Solving Survival Guide to accompany Financial Accounting, 8th Edition by Donald E. Kieso, Paul D. Kimmel, Jerry J. Weygandt

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OVERVIEW

Due to the time value of money, a certain sum today is not equal to the same sum at a future point in time. We must consider the compound interest factor for the time between two given dates in order to determine what amount in the future is equivalent to a given sum today or what amount today is equivalent to a given sum in the future. We compound the dollar amount forward in time in the former case and discount the dollar amount from the future to the present time in the latter case. In this appendix we discuss the procedures for computing the future value and present value of a single sum and/or an ordinary annuity.

Future value and present value tables appear at the end of this appendix.

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