【正文】 by the amount to be received in the future. Period 7% 8% 9% 10% 12% 1 2 3 4 5 6 $100 X = $ 5 Computing Future Values ? Using future value tables (Table III): ? Choose the time period and interest rate used. ? Multiply the factor by the amount invested today. Period 7% 8% 9% 10% 12% 1 2 3 4 5 6 $ X = $100 6 Annuities ? A series of equal amounts to be received or paid at the end of equal time periods. ? Present values or future values can be puted for annuities. – Use number of periods and rate to find appropriate factor. – Multiply the factor by the annuity (payment) amount. Present value factor of annuity (Table II) X Payment = Present value 7 Notes Payable ? Longterm debt that is paid back at the end of the loan term. ? Interest is usually paid throughout the loan period. To record a loan from the bank (2 year 10% loan): Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,000 Notes Payable. . . . . . . . . . . . . . . . . 10,000 To record the interest for year 1: Interest Expense. . . . . . . . . . . . . . . . . . 1,000 Cash . . . . . . . . . . . . . . . . . . . . . . . . . 1,000 To record the repayment of the loan and year 2 interest: Notes Payable . . . . . . . . . . . . . . . . . . . . 10,000 Interest Expense . . . . . . . . . . . . . . . . . . 1,000 Cash . . . . . . . . . . . . . . . . . . . . . . . . . 11,000 8 Mortgages ? A written promise to pay a stated amount of money. ? Secured by the pledging of certain assets. ? Liability recorded on the balance sheet is the amount borrowed (which is also the present value of the future payments). A pany takes out a 30year, $100,000 mortgage with monthly payments. The interest rate on the mortgage is 8%. The monthly payments are $: Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100,000 Mortgage Payable. . . . . . . . . . . . . . . 100,000 9 Mortgage Amortization ? Part of each mortgage payment pays off interest due and part of the payment reduces the principal amount due. ? A schedule can be prepared showing the portions of each payment that are principal and interest. Interest Principal Balance Payment (Balance X Interest Rate) (Payment – Interest) 100, 1 99, 2 99, 3 99, 4 99, 5 99, 6