Finance Chapter 5

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10 Terms

1
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constant

Simple interest: Principal + interest(period 1) + interest(period2) —here, the interest is ____

2
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1

Interest on interest— Original principal + interest(period1) + (interest(period 2) + __)

3
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future interest value

FV = 1 x (1 + r)^t ——> (1+r)^t is the ___ ___ ____, or FVIF

4
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inversely

Present value and discount rates are ___ related. 

5
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Discount factor

PV  = FV x 1/(1+r)^t ——> 1/(1+r)^ is the ___ ___, or PVIF

6
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years

T = # of ____

7
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compounded/year

m = # of times ____/____

8
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year

Ryr = interest rate per ____

9
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compounding period

I / YR = interest rate per ___ ___, or Ryr / m

10
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periods

N = # of compounding ____, T x m