ADMS 2600 Lecture Notes - Lecture 19: Retained Earnings, Mansfield, Interest

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P- present value (amount of money at a time) F- future value (amount of money at some future time) A= series of consecutive, equal, end of period amounts of money n- number of interest period i= interest rate. Equity financing the firm uses funds either from retained earnings, new stock issues. Debt financing the firm borrow funds from outside sources: money going out vs money coming in is referred to as ____________ and ______________ Cash outflows, cash: money going out vs money coming in is referred to as ____________ and ______________ Simple interest is only based on the principal amount of a loan, while compound interest is based on the principal amount and the accumulated interest. Simple interest is calculated by multiplying the principal amount by the interest rate and the number of periods in a loan. Present value is the current value of future cash flow.

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