ePortfolio TVM Assignment acct2310

Annuity amount $200,000

11.65358

= $2,330,716

11.65358 = Present value of an ordinary annuity of $1: Term=25, Interest=7%

Fund Accumulation Schedule

Beginning
Balance
$
2,330,716

Payment at
end of
Period
$
200,000

Interest
$
163,150

Principle
$
36,850

Ending
Balance
$
2,293,866

2,293,866

200,000

160,571

39,429

2,254,437

2,254,437

200,000

157,811

42,189

2,212,247

2,212,247

200,000

154,857

45,143

2,167,105

2,167,105

200,000

151,697

48,303

2,118,802

2,118,802

200,000

148,316

51,684

2,067,118

2,067,118

200,000

144,698

55,302

2,011,816

2,011,816

200,000

140,827

59,173

1,952,644

1,952,644

200,000

136,685

63,315

1,889,329

Period

10

1,889,329

200,000

132,253

67,747

1,821,582

11

1,821,582

200,000

127,511

72,489

1,749,092

12

1,749,092

200,000

122,436

77,564

1,671,529

13

1,671,529

200,000

117,007

82,993

1,588,536

14

1,588,536

200,000

111,198

88,802

1,499,733

15

1,499,733

200,000

104,981

95,019

1,404,715

16

1,404,715

200,000

98,330

101,670

1,303,045

17

1,303,045

200,000

91,213

108,787

1,194,258

18

1,194,258

200,000

83,598

116,402

1,077,856

19

1,077,856

200,000

75,450

124,550

953,306

20

953,306

200,000

66,731

133,269

820,037

21

820,037

200,000

57,403

142,597

677,440

22

677,440

200,000

47,421

152,579

524,860

23

524,860

200,000

36,740

163,260

361,601

24

361,601

200,000

25,312

174,688

186,913

25

186,913

200,000
$
5,000,000

13,087
$
2,669,284

186,913
$
2,330,716

(0)

Totals

The settlement amount is fair because it takes into account that John would be still making his
$200,000 a year if the incident didnt happen. How the settlement was calculated was they took
what John would have earned every year and multiplied it by the pre-calculated value from the
present value of an ordinary table by looking up how many more years until his retirement or the
term and the 7% rate.
This assignment is a good fit to accounting because it shows the time value of money. That if
you invest a designated amount each year for a specific amount of time at a designated interest
rate the amount will grow. With this assignment it demonstrates that given a lump sum of
$2,330,716 you could withdraw the same amount each year and with interest taken in to
consideration you dont have to worry about saving the whole amount. The reason this prepares

me for my field of study is because accounting is all about the time value of money and what
may be $1 today may not be the same $1 tomorrow.