Describe the process of compounding and the meaning of compound interest.
Answer to relevant QuestionsBriefly describe how inflation or purchasing power impacts on stated or nominal interest rates. Describe the process for determining the size of a constant periodic payment that is necessary to fully amortize a loan such as a home mortgage. Find the future value (FV) one year from now of a $7,000 investment at a 3 percent annual compound interest rate. Also calculate the future value if the investment is made for two years. Determine the present value (PV) now of an investment of $3,000 made one year from now and an additional $3,000 made two years from now if the annual discount rate is 4 percent. Use a financial calculator or computer software program to answer the following questions. a. What is the present value (PV) of $359,000 that is to be received at the end of 23 years, the discount rate is 11 percent, and ...
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