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1.6 Week3 Lect 1 TVM PT4

# 1.6 Week3 Lect 1 TVM PT4 - TVMPt4OtherTypes ofTVMProblems...

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TVM – Pt 4 Other Types  of TVM Problems Week 3 Lecture 1

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Time Value of Money The most important concept in finance A Dollar now (PV) is worth _______ than a Dollar a year from now (FV) WHY?
Time Value of Money – already  mastered Present Value  Future Value Perpetuities Annuities Growing Perpetuities Growing Annuities Time for funds to accumulate Compounding Periods

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Other Types of TVM Problems-today Implied interest rates Effective Interest rates Amortization Inflation
Effective Interest Rates Annual Percentage Rate  - Interest rate that is  _______________________. Effective Annual Interest Rate - Interest rate that is ____________________________. Periodic Interest Rate  - Interest rate that occurs  _________________.

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Simple (Quoted) Rate: APR I SIMPLE = I NOM  = APR: is an annual rate that  ___________________________________ This is the rate ___________________________     _______________________________   ________________________________ This rate is __________ in calculations or time lines. Examples: 8%, compounded quarterly 8%, compounded daily (365 days)
Periodic Rate Periodic rate = I PER  = I SIMPLE /m= I NOM /m =   ___________________________________ Where m is number of ___________________ ______.   m = __ for quarterly, ___ for monthly, and  ____________ for daily compounding. Used in ______________________________. If M = 1,  I NOM  = I PER  =  EAR. Examples: 8% quarterly: r PER  = _________ 8% daily (365): r PER   =  _____________

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Effective Annual Rate Effective (or equivalent) annual rate (EAR = EFF%) –  the annual rate of interest ______  ________________________________.
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1.6 Week3 Lect 1 TVM PT4 - TVMPt4OtherTypes ofTVMProblems...

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