| Course | ACC 317 Intermediate Accounting I |
|---|---|
| Module | Module 8 |
| Paper type | undergraduate time value of money applications assignment |
| Length | About 1,010 words, 6 pages |
| Format | APA 7 student paper |
| School | Southern New Hampshire University |
| Program | BS Accounting |
| Updated | October 2026 |
Free sample paper for ACC 317 Module 8
Money Now, Money Later: Three Time Value of Money Applications at a Composite Hot Tub Manufacturer
[Student Name]
Southern New Hampshire University
ACC 317: Intermediate Accounting I
Module Eight Assignment
[Instructor Name]
[Date]
The organization, setting and figures below are a composite written as a model document. No real employer, client, colleague or patient is described.
Money Now, Money Later: Three Time Value of Money Applications at a Composite Hot Tub Manufacturer
Introduction
Cash in hand in January beats the same cash three Januaries later, because the earlier money can be put to work in the meantime. GAAP builds that idea into measurement whenever cash flows are delayed, and managers use it to compare choices (Kieso et al., 2019). This assignment applies present and future value to three situations at a composite hot tub manufacturer in Tennessee: valuing a note that carries no interest, planning a fund for a plant expansion and choosing between two ways of paying a supplier. Each problem states the cash flows, the rate and the number of periods, computes the answer and explains what it means. Three questions come first in every problem: is the unknown a present or a future amount, is the cash flow a single sum or a series of equal payments, and do the payments fall at the start or the end of each period? Answering those three in writing before touching a calculator prevents most errors, and it makes the work easy for a reviewer to follow.
Problem 1: A Non-Interest-Bearing Note
In January a mountain resort took delivery of tubs and gave the company a three-year note for $180,000 that names no interest rate at all. A note that carries no interest still contains interest; it is simply built into the face amount. The resort's borrowing rate for similar credit is 7 percent, so the note is valued at the present value of $180,000 discounted for three years at 7 percent.
Present value = $180,000 / (1.07)^3 = $180,000 / 1.225043 = $146,934.
The company records revenue and a note receivable at $146,934, not $180,000. Recording the face amount would overstate revenue by $33,066, which is really interest the company will earn for waiting. Concepts Statement No. 7 explains that present value measurement aims to capture the economic difference between sets of cash flows that differ in timing (Financial Accounting Standards Board, 2000).
Table 1. Note Amortization at 7 Percent
| Year | Beginning carrying value | Interest income at 7% | Ending carrying value |
|---|---|---|---|
| 1 | $146,934 | $10,285 | $157,219 |
| 2 | 157,219 | 11,005 | 168,224 |
| 3 | 168,224 | 11,776 | 180,000 |
| Total | $33,066 |
Interest in year 3 is rounded so the carrying value ends exactly at $180,000. At signing the company debits Notes Receivable for $180,000, credits Discount on Notes Receivable for $33,066 and credits Sales Revenue for $146,934. Each year it debits the discount and credits Interest Income for the amount in the table. When the resort pays, Cash is debited and Notes Receivable credited for $180,000.
Problem 2: Funding a Plant Expansion
The owners want $2,000,000 available in five years to add a second molding line. They plan to make equal deposits at the end of each year into an account earning 4 percent. This is a future value of an ordinary annuity problem in which the payment is unknown.
Future value factor = [(1.04)^5 minus 1] / 0.04 = (1.216653 minus 1) / 0.04 = 5.416323.
Annual deposit = $2,000,000 / 5.416323 = $369,254.
Over five years the company deposits $1,846,270 and earns about $153,730 of interest. If the deposits were made at the beginning of each year instead, an annuity due, each would earn one more year of interest and the required deposit would fall to about $355,052. The timing of the first deposit, in other words, is worth about $14,000 a year.
The fund also needs an accounting treatment. Because the money is set aside for a specific long-term purpose and is not available for current operations, it is reported as a long-term investment, not as cash, and the interest it earns is reported as investment income each year. The owners should also decide what happens if the expansion is delayed; a fund that sits idle at 4 percent while the company pays 7 percent on its term loan has a real cost, and paying down debt might be the better use of the same deposits.
Problem 3: Pay Now or Pay Over Time
A resin supplier offers to lock in prices for four years in exchange for either a $500,000 prepayment now or $140,000 at the end of each year. The company's cost of borrowing is 6 percent. The installments are an ordinary annuity, so their cost today is their present value.
Present value factor = [1 minus (1.06)^-4] / 0.06 = (1 minus 0.792094) / 0.06 = 3.465106.
Present value of installments = $140,000 x 3.465106 = $485,115.
Paying in installments costs $485,115 in today's dollars, about $14,885 less than the $500,000 prepayment, so the company should choose installments. The answer would reverse if the company's cost of money were below about 4.7 percent, the break-even rate for this pair of offers. The prepayment also carries a risk the present value calculation does not capture: if the supplier failed in year two, the company would have paid for resin it never received. Installments keep that risk with the supplier, which is a second reason to prefer them. Graham and Harvey (2001) found that most large companies use present value methods such as net present value to evaluate projects, but that smaller firms rely more on simpler rules such as payback; a comparison like this one shows why the discounting step matters, since the undiscounted installments total $560,000 and would wrongly appear far more expensive.
Conclusion
The resort's $180,000 note is worth $146,934 when signed and earns $33,066 of interest over three years. Funding $2 million in five years at 4 percent requires deposits of $369,254 a year, or less if made at the start of each year. And the supplier's installment plan costs $485,115 in present value terms, cheaper than prepaying $500,000. In each case the right answer came from comparing cash flows at the same point in time. None of the three answers could be found by adding up the dollars involved, which is why the course treats discounting as a measurement skill rather than a finance topic: the note's revenue, the fund's deposits and the supplier choice all depend on it.
References
Financial Accounting Standards Board. (2000). Using cash flow information and present value in accounting measurements (Statement of Financial Accounting Concepts No. 7). Author.
Graham, J. R., & Harvey, C. R. (2001). The theory and practice of corporate finance: Evidence from the field. Journal of Financial Economics, 60(2-3), 187-243. https://doi.org/10.1016/S0304-405X(01)00044-7
Kieso, D. E., Weygandt, J. J., & Warfield, T. D. (2019). Intermediate accounting (17th ed.). Wiley.
What the ACC 317 Module 8 instructions ask for
The Module Eight assignment in ACC 317 usually presents several time value of money problems tied to accounting measurement. Expect to compute present and future values of single sums and annuities, impute interest on notes that carry no stated rate or a rate below market, prepare amortization tables, and record the related entries. Some versions ask you to compare alternatives, such as lump sum and installment payments, or to find a required deposit or interest rate. Show the formula, the interest rate and number of periods, and the factor or calculator inputs for each problem, and explain each answer in a sentence. Round consistently and note any rounding adjustment in the final period of a table.
How this ACC 317 Module 8 time value of money assignment example is built
The sample solves three problems. First, a resort signs a three-year, non-interest-bearing note for $180,000 in exchange for hot tubs; at a 7 percent market rate the note's present value is $146,934, which is the revenue recorded, and an amortization table shows interest income rising each year to the $180,000 face. Second, the company wants $2 million in five years for a plant expansion; at 4 percent, the required annual deposit is $369,254. Third, a resin supplier offers a $500,000 prepayment or $140,000 a year for four years; at 6 percent the installments have a present value of $485,115, so they are cheaper. Each answer is explained for a manager.
Where the ACC 317 Module 8 rubric puts the points
Rubrics for the ACC 317 time value of money assignment generally score the setup of each problem, the correct factor or formula, the arithmetic, any amortization table and entries, and the interpretation. Top papers identify whether each cash flow is a single sum or an annuity, ordinary or due, use the market rate rather than a stated rate when imputing interest, and build tables that end at the face value with a disclosed rounding adjustment. Graders reward a sentence that explains what each answer means for the decision. Common deductions include using a future value factor where present value is needed, recording revenue at the face of a non-interest-bearing note and mixing annual and monthly periods.
ACC 317 Module 8 help: the mistakes that cost points
Students most often lose points on these problems by choosing the wrong factor, by treating an annuity due as an ordinary annuity, and by recording a non-interest-bearing note at face value, which overstates revenue and ignores the interest earned over time. Another frequent slip is rounding factors to three places and ending a table far from the face amount. If your problems involve bonds, leases or deferred annuities, send them and the paper will follow your setup. A reliable check is to recompute each answer in reverse, for example by growing the present value forward at the same rate, and confirming you reach the stated future amount.
Get ACC 317 Module 8 written to your instructions
Send the ACC 317 Module 8 problems and instructions. The paper will set up each problem, identify the right factor, compute the result, build any amortization table and record entries, then explain the decision in plain words. The first one costs nothing and is typically ready in two days. The paper above is an original model document written by our desk, not a submitted student paper and not an official Southern New Hampshire University document.
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ACC 317 Module 8 questions, answered
Where can I find a free ACC 317 Module 8 time value of money sample?
This page shows a full ACC 317 Module 8 assignment with an imputed-interest note, a sinking fund deposit and a lump sum versus annuity comparison.
How do you value a non-interest-bearing note?
Discount the face amount to present value at the market rate for a similar note. The difference between face and present value is recognized as interest over the note's term.
What is the difference between an ordinary annuity and an annuity due?
Ordinary annuity payments occur at the end of each period; annuity due payments occur at the beginning, so each payment earns or is discounted for one more period.
How do you compare a lump sum with installment payments?
Discount the installments to present value at the appropriate rate and compare with the lump sum. The option with the lower present value cost is cheaper.
Why does a rounding adjustment appear in the last year of an amortization table?
Rounded interest amounts can leave the carrying value slightly off the face amount, so the final interest figure is adjusted to bring the balance exactly to face.