Financial Math Fall Final Unit 4 Calculations Review

Front

What is the formula for calculating the future value of an investment with regular contributions?

Back

Future Value = P * ((1 + r/n)^(nt) - 1) / (r/n) where P = payment per period, r = annual interest rate, n = number of compounding periods per year, t = number of years.

Front

What does APR stand for and what does it represent?

Back

APR stands for Annual Percentage Rate. It represents the annual rate charged for borrowing or earned through an investment, expressed as a percentage.

Front

How do you calculate the balance of an investment with simple interest?

Back

Balance = Principal + (Principal * Rate * Time) where Principal is the initial amount, Rate is the interest rate, and Time is the duration in years.

Front

What is the difference between simple interest and compound interest?

Back

Simple interest is calculated only on the principal amount, while compound interest is calculated on the principal and also on the accumulated interest from previous periods.

Front

How do you calculate the present value of a future amount?

Back

Present Value = Future Value / (1 + r)^t where r is the interest rate and t is the number of years until the amount is received.

Front

What is the formula for calculating compound interest?

Back

Compound Interest = Principal * (1 + r/n)^(nt) - Principal where r is the annual interest rate, n is the number of times interest is compounded per year, and t is the number of years.

Front

What is an outstanding deposit?

Back

An outstanding deposit is a deposit that has been made but has not yet been processed or cleared by the bank.

Front

What is an adjusted bank balance?

Back

An adjusted bank balance is the balance after accounting for outstanding deposits and payments that have not yet cleared.

Front

How do you reconcile a bank statement?

Back

To reconcile a bank statement, compare the bank's records with your own check register, adjusting for outstanding transactions to find the adjusted balance.

Front

What is the significance of compounding frequency in investments?

Back

The compounding frequency affects how often interest is calculated and added to the principal, impacting the total amount of interest earned over time.