Finance Exam 2

Interest earned on both the initial principal and the interest reinvested from prior periods.

• Compound Interest

• Simple Interest

• Compounding

• Discount

The process of accumulating interest on an investment over time to earn more interest.

• Compound Interest

• Simple Interest

• Compounding

• Discount

Interest earned only on the original principal amount invested.

• Compound Interest

• Simple Interest

• Compounding

• Discount

The rate used to calculate the present value of future cash flows.

• Discount Rate

• Discounted Cash Flow

• Present Value

• Future Value

Calculating the present value of a future cash flow to determine its value today.

• Discount Rate

• Discounted Cash Flow

• Present Value

• Future Value

The amount an investment is worth after one or more periods. (Amount you will have)

• Discount Rate

• Discounted Cash Flow

• Present Value

• Future Value

The current value of future cash flows discounted at the appropriate discount rate. (Amount you have rn)

• Discount Rate

• Discounted Cash Flow

• Present Value

• Future Value

The amount you earn from investing your money

• Intrest Earned

• Intrest-on-intrest

• Rule of 72

• Discounted Cash Flow

Interest earned on the reinvestment of previous interest payments.

• Intrest Earned

• Intrest-on-intrest

• Rule of 72

• Discounted Cash Flow

A simple way to determine how long an investment will take to double in value given a fixed annual rate of interest.

• Intrest Earned

• Intrest-on-intrest

• Rule of 72

• Discounted Cash Flow