Finance (MCR3U - Functions)

What is a principal? Symbol?

P

sum of money invested or loaned

What is a amount or future value? Symbol?

A or FV

Total amount of money at the end of the term

What is present value? Symbol?

PV

the principal that needs to be invested now to get a specific value in the future

What is interest? Symbol?

i

money earned from an investment or the cost of borrowing money

What is a term? Symbol?

no symbol

the length of the investment (usually in years)

What is an interest rate?

simple: r compounded: i

Effective interest rate as a % per compounding period

What is the total # of compounding periods? Symbols?

simple: t compounded: n

total # of periods within a term

what is an Annuity

a series of payments or investments made at regular intervals

what is a simple annuity

annuity in which the payments coincide with the compounding period or conversion period.

What is an ordinary annuity

an annuity in which the payments are made at the end of each interval

what is the formula for annuities future value?

what is the formula for present value

Describe the difference between simple and compound interest.