MAT133Y1 Lecture 2: lec#2 FV, PV, cpd interest rate
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Financialmath45-fifetime=money- theinterestrateatwhichyouarealmostcertainlytoreceiveyourinvestmentbtheultimateinwhichtimeisequaltomoney. ie. moneyisworthnowherer--interestratecookno interestrateiwkiwklookitimetodaytyryrsayinteresttoogtr)lwlftr)"ladhr)}-rate--r moneymdifferenttimecanonlybecompareduptointerestrateeg=yourparentsdecidedtogiveyou ahighschoolgraduationgift. buttheygivegonachoice:1),3monthsfromday2)todayif the interestrateis252per3monthsquestion". today. havmuchdoeseachoptionworth?-answer to seenextpage option i. $ 8w today on the bank you ward have received. 7 the the quake featured future time ie . b the is it the. B the worth worth of of mercy today money is a money . worth - equivalent present value. B the interest rate per writ of time thenthe future value in. 1 unit of time is related to the present value via. Pv elf i you have in a bank. Mm waned you like to deposit it that has a rate r. If in to year you hope to accumulate. and with semi annual promise rate of to. Zips pay baek an you equivalent fair ) 5w c 1. 02 ) not far far you. To understand this question , pretend now : bank rate of today. Given a nominal rate r m period . To an fad equivalently partner effective rate of each that apdsauy.
