Ch.4 FIN 351

Ch.4 FIN 351 - Quick Quiz: Part 1 What is the difference...

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Unformatted text preview: Quick Quiz: Part 1 What is the difference between simple interest and compound interest? (Slide 4.11) 4-1 Quick Quiz: Part 2 What is the relationship between present value and future value? (Slide 4.32) 4-2 Effects of Compounding Simple interest Interest earned only on the original principal Compound interest Interest earned on principal and on interest received "Interest on interest" interest earned on reinvestment of previous interest payments Return to Quiz 4-3 Present Values FV = PV(1 + r)t Rearrange to solve for PV PV = FV / (1+r)t PV = FV(1+r)-t "Discounting" = finding the present value of one or more future amounts. Return to Quiz 4-4 ...
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Ch.4 FIN 351 - Quick Quiz: Part 1 What is the difference...

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