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10 Cards in this Set
- Front
- Back
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Future Value
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The amount and investment is worth after one or more periods.
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Compounding
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The process of accumulating interest on an investment over tine 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
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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.
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Discounted Cash Flow (DCF) Valuation
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Calculating the present value of a future cash flow to determine its value today.
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Rule of 72
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For reasonable rates of return, the time it takes to double your money is given approximately by 72%/r
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