Chapter 5 Flashcards
1
Q
Time Value of Money
A
Money can be invested today to earn and grow to a larger dollar amount in the future
2
Q
Interest
A
Amount of money received in excess of the amount of money invested
3
Q
Simple interest
A
Interest earned only on the initial investment
4
Q
Compound interest
A
Money is reinvested for multiple periods
5
Q
Compounding Period
A
How frequently interest is added to the pool
6
Q
Annuity
A
Series of cash flows over multiple periods of the same amount each period
