Match the Formula to the Equation Ch. 5

Name this formula

• Amortization Payments

• Remaining Balance

• FV of continuous interest formula

• Effective Interest Rate

Answer explanation

Name this formula

• Effective interest rate

• PV of ordinary annuity

• Remaining balance

• Amortization Payments

• Future Value of an Ordinary Annuity

• Amortization

  Payments

• Future value of Payments Due

• Future Value of Annuity Due

Answer explanation

An annuity due is a series of equal payments made at the beginning of each period.

Because payments are made at the beginning of each period in an annuity due, they have one extra compounding period compared to an ordinary annuity.

PV of Ordinary Annuity Fomula?

• True

• False

Future Value of Continuous Compound Interest?

• True

• False

Answer explanation

This is the Future Value of Ordinary Annuity formula

Effective Interest Rate Formula?

• True

• False

Name this formula

• FV of I (simple interest)

• FV of continuous compound interest

• FV of ordinary annuity

• PV of ordinary annuity

Future Value of Compounding Interest?

• True

• False

Simple Interest?

• True

• False

Answer explanation

False, this equation is Future Value of I (simple interest)

Name this formula

• Effective Interest Rate

• Future Value of I

• Simple Interest