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Unformatted text preview: Quick Quiz: Part 1 What is the difference between simple interest and compound interest?
(Slide 4.11) 41 Quick Quiz: Part 2 What is the relationship between present value and future value? (Slide 4.32) 42 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 43 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.
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This note was uploaded on 04/28/2011 for the course FIN 351 taught by Professor Christen during the Spring '11 term at Youngstown State University.
 Spring '11
 Christen
 Compounding, Future Value, Interest

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