After studying this chapter, you should be able to:
LO1 Explain the difference between simple and compound interest.
LO2 Compute the future value of a single amount.
LO3 Compute the present value of a single amount.
LO4 Solve for either the interest rate or the number of compounding periods when present value and future value of a single amount are known.
LO5 Explain the difference between an ordinary annuity and an annuity due situation.
LO6 Compute the future value of both an ordinary annuity and an annuity due.
LO7 Compute the present value of an ordinary annuity, an annuity due, and a deferred annuity.
LO8 Solve for unknown values in annuity situations involving present value.
LO9 Briefly describe how the concept of the time value of money is incorporated into the valuation of bonds, long-term leases, and pension obligations.
