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9 Cards in this Set
- Front
- Back
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future value
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the amount an investment is worth after one or more periods
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compounding
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the process of accumulating interest in an investment over time to earn more interest
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interest on interest
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interest earned on the reinvestment of previous interest payments
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compound interest
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interest earned on both the initial principal and the interest reinvested from prior periods
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simple interest
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interest earned only on the original principal amount invested
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Present value (PV)
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the current value of future cash flows discounted at the appropriate discount rate
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discount
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calculate the present value of some future amount
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discount rate
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the rate used to calculate the present value of future cash flows
[1/(1+r)t] |
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discounted cash flow (DCF) valuation
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valuation calculating the present value of a future cash flow to determine its value today
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