1. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 16-1 Business Decisions Using Present Values

2. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 2 LESSON 16-1 $1,000 $1,600 $1,400 $1,200 $800 Future Value of $1,000 at 10% Interest $1,000.00 1/1/X1 FUTURE VALUE OF MONEY $133.10 $1,000.00 $100.00 $121.00 $110.00 $1,464.10 12/31/X4 $121.00 $1,000.00 $110.00 $100.00 $1,331.00 12/31/X3 $110.00 $1,000.00 $100.00 $1,210.00 12/31/X2 $100.00 $1,000.00 $1,100.00 12/31/X1 $1,000.00 × 10% $100.00 $1,100.00 × 10% $110.00 $1,210.00 × 10% $121.00 $1,331.00 × 10% $133.10 page 474

3. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 3 LESSON 16-1 Interest Rate Current Investment Value on 12/31/X2 Interest Earned in 20X3 ×= FUTURE VALUE OF MONEY $1,210.00×=$121.00 10% Interest Earned in 20X3 Current Investment Value on 12/31/X2 Balance on 12/31/X3 += $1,210.00+=$1,331.00 $121.00 page 475

4. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 4 LESSON 16-1 PRESENT VALUE OF MONEY page 476 Projected Net Cash Flows$1,464.10 times Present Value Factor× 0.683 Present Value$999.98

5. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 5 LESSON 16-1 BUSINESS DECISIONS USING PRESENT VALUES page 477

6. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 6 LESSON 16-1 TERMS REVIEW time value of money future value compounding present value rate of return cash flows net cash flow net present value page 478