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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.
