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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## 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.

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

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