The value to which a lump sum grows over a given period at a specific interest rate
What is its future value (FV)?
The process of interest being earned on increasing sums of principal and interest over time
What is compounding?
N=10
I/YR=5%
PV=20,000
FV=32,577.89
I/Y=6.25%
PV=65,000
FV=89,000
N=5.183
FV=300,000
N=20
I/YR=12%
Find PMT
PMT=4,163.63 per year
The amount paid each period towards a borrowed amount or towards savings
What is a payment (PMT)?
A series of equal and regular savings deposits or payments
What is an annuity?
N=8
I/YR=3%
PV=50,000
FV=63,338.50
I/YR=13.5%
PV=13,000
FV=100,000
N=16.111
FV=400,000
N=15
I/YR=9%
PMT=10,000
Find PV
$190,422.10
The number of years for a present value to grow into a future value
What are compounding periods (N)?
The accumulation of funds needed to meet a future financial goal
What is the future value of an annuity?
N=15
I/YR=10%
PV=100,000
FV=417,724.82
I/YR=3.2%
PV=5,600
FV=12,000
N=24.195
FV=100,000
N=12
Inflation Rate=3%
Investment ROR=7%
Find PMT
$6,699.82 per year
A proportion of the amount lent, deposited, or borrowed based on the original principal
What is the interest rate (I/YR)?
The repayment of loan principle over time
What is amortization?
N=20
I/YR=7%
PV=40,000
FV=154,787.38
I/YR=22%
PV=10,500
FV=21,000
N=3.485
30 year mortgage
PV=150000
Int. Rate=3.5%
Find PMT
$673.57 per month
The value today of an amount to be received in the future when discounted for a given number of periods at a given interest rate
What is its present value (PV)?
A document that shows how much principle and interest are being repaid with each payment
What is an amortization schedule?
N=50
I/YR=12%
PV=35,000
FV=10,115,076.04
I/YR=9.75%
PV=120,000
FV=512,000
N=15.59