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Intermediate Accounting For Dummies by Maire Loughran

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Chapter 8

Time Is Money: Looking at the Time Value of Money

In This Chapter

arrow Looking at simple and compound interest

arrow Understanding the difference between single payments and annuities

arrow Figuring future and present values

arrow Delving into more complicated time value topics

I don’t know about you, but making money through the magic of interest is just about my favorite way to earn. Sure, I like to work, but something about making money without active effort is pretty darn appealing.

This chapter looks at the time value of money from the perspective of both the investor and the creditor. I walk you through simple and complex interest and show you how to value the money you’re holding in your hand now to see what it will be worth in the future. I also look at annuities — which are series of payments — and how to value them. Finally, the chapter wraps up with a more advanced discussion about deferred annuities and long-term bonds.

Taking an Interest in Interest

At this stage of your life, you’ve probably earned money to buy a car or a computer or enhance your wardrobe by earning income. And ...

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