Personal Finance Lesson 4-1

Interest that accumulates on the principal and the accrued interest.

• Compound Interest

• Future Value

• Inflation

• Interest Rate

 The value of an asset sometime in the future based on an assumed rate of growth.

• Present Value

• Future Value

• Inflation

• Rate of Return

The increase in prices over a specific period of time, usually shown as a percentage.

• Present Value

• Future Value

• Compound Interest

• Inflation

 The percentage of principal charged by the lender for loaning money

• Compound Interest

• Interest Rate:

• Future Value

• Simple Interest

The current value of a stream of future cash flows, discounted at a certain rate.

• Time Value of Money

• Interest Rate

• Inflation

• Present Value

The percentage gain or loss on an investment over a specified period of time.

• Rate of Return (ROR)

• Simple Interest

• Time Value of Money

• Inflation

 Interest that is earned on the principal amount of investment, calculated by multiplying the interest rate (percentage) by the principal amount.

• Simple Interest

• Interest Rate

• Present Value

• Time Value of Money

The concept that an amount of money is worth more today than the same amount of money is worth in the future.

• Simple Interest

• Time Value of Money

• Present Value

• Inflation