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Lesson 104, Topic 1

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🎥+✏️Present Value and Future Value of a Single Amount 🟢

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Kwaku Edusei 26 July 2024

So if we had a note receivable due in 3 years, would we record the present value of the initial principal amount and present value of annual interest over 3 years?

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1. Maroun, CPA 27 July 2024
  
  Hello Kwaku,
  
  The present value concept is that money today is worth more than the same amount in the future due to its potential earning capacity. Therefore, present value calculations discount future cash flows to reflect their current worth. The future cash flows of an interest-bearing note receivable consists of two components: the principal amount, which is the original amount to be repaid at the end of the term, and the interest payments. Therefore, the lender must record the sum of the present value of both the principal and the interest payments expected over the term of the note.
  
  I hope this helps!
  
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Bianca Cruz 2 December 2024

This was an amazing video and explanation. The way you first explained future value with a formula then proved it with the table then switched after to the present value formula and table (what we are tested on the CPA) it all clicked! Becker went straight into showing the present value so I never understand the concept. You are great at breaking down really complex concepts to their core and showing the big picture. Thank you so much for these! Worth every penny of this subscription. My favorite part is where you say “let me prove it to you” and then show the tables for the full life and prove the end result ties out. Just wonderful.

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1. Mansour Farhat, CPA, CIA, DBA 9 December 2024
  
  Thank you. I am in the process of updating (making those lectures better!)
  
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Ahmad Al Salam 1 February 2025

Hello, I wonder if (time value table) is allowed in CPA or CMA exam!, or (BA 11 Plus Texas Instruments Calculator) as i don’t think we have the time privilege to do manual calculation in the exam.
Thanks in advance

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1. Maroun, CPA 4 February 2025
  
  Hello Ahmad,
  
  Typically, the examiners will provide two or three present or future value factors during the exam, and you will need to select the appropriate factor to use based on the given information.
  
  Let me know if you have more questions!
  
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Toni 2 October 2025

For the question example at the end. Why would the answer not be A, a dollar today is worth less than the future because of less buying power due to inflation? The question did not imply any investment opportunity.

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1. Maroun, CPA 5 October 2025
  
  Hello Toni,
  
  The time value of money says a dollar today is worth more than a dollar in the future (Choice C), not less.
  
  Why not A? Inflation makes a future dollar buy less, which reinforces that today’s dollar is more valuable. More broadly, TVM uses a positive discount rate that bundles:
  – opportunity cost (you could invest or avoid interest on debt),
  – expected inflation, and
  – risk/time preference.
  
  With a positive rate, $1 today = $1 × (1+r)^t in the future. Thus, the present dollar > future dollar. Only in the (unrealistic) case of zero inflation and zero opportunity cost would they be equal.
  
  I hope this makes sense!
  
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Adrian Singh 13 October 2025

The FV and PV table can be accessed during the exam

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1. Maroun, CPA 15 October 2025
  
  Hello Adrian,
  
  On the exam, they usually provide you with a small extract of the FV/PV tables, just the few lines you need for that question. You won’t access full tables.
  
  I hope this helps!
  
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Cyndee Jackson 6 March 2026

There doesn’t seem to be a way to mark this session “complete.” (Present and future value of a single sum) Sorry, but I have no idea how to enter the “video Timestamp”

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1. Maroun, CPA 9 March 2026
  
  Hello Cyndee,
  
  To mark this session as “complete,” you need to finish the attached quizzes linked under the video. Once those are completed, the system will allow you to mark the session complete.
  
  Hope this helps!
  
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