COMM 203 Study Guide - Final Guide: Signing Bonus, Interest, Compound Interest
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E. future value of money: pv = fvt / [1 / (1 + r)t]. D. pv = fvt / (1 + r)t: present value. E. compound interest rate: interest on the initial principal only, a decreasing amount of interest each year, the future value interest factor is calculated as, (1 + r)t. Answer: (a: the current value of future cash flows discounted at the appropriate discount rate is called the, principal value. Answer: (c: the present value interest factor is calculated as, 1/(1 + r t) Answer: (d : the concept that a dollar received today is worth more than a dollar received tomorrow is referred to as the, present value. Answer: (d : compound interest means that you earn, interest only on the initial amount invested, interest on both the principal and prior reinvested interest, the same amount of interest each year. Answer: (c : the present value equation is, pv = fvt + (1 + r)t.
