Chapter 4 Flashcards
1
Q
Discount Rate Formula
A
r = [FV/PV]^(1/t) - 1
2
Q
Number of Periods Formula
A
t= ln(FV/PV)/ ln(1+r)
3
Q
Discount
A
Current value of an amount to be received in the future.
4
Q
PV Formula
A
PV = FV/(1+r)^t
5
Q
PV
A
Current value of an amount to be received in the future.
6
Q
Simple Interest
A
Interest earned only on original principal.
7
Q
Compound Interest
A
Interest earned on both the initial principal and the interest reinvested from prior periods.
8
Q
Interest on Interest
A
Interest earned on the reinvestment of previous interest payments.
9
Q
Compounding Interest
A
Process of accumulative interest in an investment over time to earn more interest.
10
Q
FV Formula
A
FV= PV(1+r)^t
