FAF Ch9

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What is the formula to find the present value of a non annuity?

pv = (fv)(factor)
What is the formula to find the present value of an annuity?

pv ann = (payment)(factor)
What is the formula to find the future value of an annuity?

fv annuity = (payment)(factor)
What is the formula to find the future value of a non annuity?

fv = (pv)(factor)
want to know the value of FUTURE assets TODAY

use present value
want to know the value of present day assets AT A FUTURE DATE

use future value
What is the formula to calculate dollar interest amount for a note payable?

$ interest =

ex: interest = $1000 x .08 x 30/360
what are the required 3 characteristics of a liability?
- 1. a past transaction or event
- 2. a present obligation
- 3. a future payment of assets or services
Examples of known liabilities

accounts payable, notes payable, sales taxes payable, unearned revenues
What are the 3 major categories of liabilities?
- Known Liabilities
- Estimated Liabilities
- Contingent Liabilities