Exam_2_Tips - Things to Know for Exam 2 CHAPTER 5 First...

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Things to Know for Exam 2 CHAPTER 5 First read chapter 5 at least twice thoroughly and carefully (If you ignore this, it’ll cost you on the test) . Definition of PV and FV. You should be able to identify which one is FV/PV when a situation is given. Several different names are used interchangeably with the interest rate. Know what they are. Understand the general formula for a lump-sum CF and be able to calculate PV, FV, r, and t when each of which is unknown. What is compound interest? What is the difference between compound interest and simple interest. Be able to calculate simple and compound interests. Be able to find the interest on interest Understand relationships among variables –– FV, PV, r, and t. For example, for a given r, the longer the time period, the lower the PV. Be able to explain all possible relationships (This is really important) Do all chapter-end problems CHAPTER 6
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