Ask the NINJAs: Present Value Calculations for FAR

14 Oct 2015

Ask the NINJAs

Dear NINJAs,

Do you now if time value of money is on the FAR exam?

If so, do they ask the very complex questions that I see in my review course? – Terri



Dear Terri,

Your CPA Review course may be over-doing it.

For the most part, the TVM calculations for FAR aren't as in-depth as they are for BEC, where topics like Capital Budgeting are tested.

For FAR, you will need to know the difference between two different cash flows using a table and pick the correct number.

An example from NINJA MCQ would be:


Make sure you know the difference between an Annuity Due and an Ordinary Annuity.

For example – with Lease Payments (from the NINJA Notes):

Annuity Due
o Payments begin at the start of the lease
o Think: Rent is Due at the first of the month

Ordinary Annuity
o Payments begin after the end of the first year
o Think: An annuity that pays you at end of year




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