ITM 410 Chapter Notes - Chapter Supplement F: Earnings Before Interest And Taxes, Discount Window, Salad Bar
2 Apr 2017
School
Department
Course
Professor
Document Summary
The concept that a dollar in hand can be invested to earn a return so that more than one dollar will be available in the future. Future value of an investment the value of an investment at the end of the period over which interest is compounded. Compounding interest the process by which interest on an investment accumulates and then earns interest itself for the remainder of the investment period. F = future value of the investment at the end of n periods. P = amount invested at the beginning, called the principle. N = number of periods for which the interest compounds. Example the value of a k investment @ 12% per year, 1 year from now is: (1. 12) = . If the entire amount remains invested, @ the end of 2 years, you"d have (1. 12) = (1. 12) 2 = P = f / (1 + r) n.
