This preview shows pages 1–4. Sign up to view the full content.
This preview has intentionally blurred sections. Sign up to view the full version.
View Full DocumentThis preview has intentionally blurred sections. Sign up to view the full version.
View Full Document
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.
Return to Quiz 44 ...
View Full
Document
 Spring '11
 Christen
 Compounding, Future Value, Interest

Click to edit the document details