FIN 571 Week 4 DQ 1 NEW

Question 1

FIN 571 Week 4 DQ 1 NEW

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We can determine the value of an investment at the end of one period (whether it is a month, quarter or year) if we know the interest rate to be earned by the investment. If you invest for one period (single period investment) at an interest rate of i, your investment, or principal, will grow by (1 + i) per dollar invested. The term (1+ i) is the future value interest factor–often called simply the future value factor.

How can we determine the value of a two period investment what components are included in the calculation?

Answer 1

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