UGBA 180 Study Guide - Comprehensive Final Exam Guide - Mortgage Loan, Internal Rate Of Return, Interest Rate

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Pv: present value, the initial deposit, present value of an investment of money. Fv: future, value at some specified future period. M: number of compounding intervals within one year. Annual formula: fv = pv(1 + i)n. Monthly formula: fv = pv(1 + i/m)n*m. Pmt formula: fv = t=1 n-1 pmt(1 + i)t +pmt. Suppose you leave the k for 2 years. => fv = 10,000(10,000 * 0. 06)*(10,000 * 0. 06) = 11,236. Suppose 6% rate is compounded monthly not annually. => fv = 10,000 (1 + 0. 06/12)1*12= 10,616. 78. Consider an investment that pays . 6k after 1 year. Pv = fv / (1 + i)n. So far we only have been doing a single deposit or payment made once. But: many investments involve a series of equal deposits (or payments) made at equal intervals over time. Deposit k at the end of each year for 5 years. Interest compounded at annual rate of 5%

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