The Five Components
Important Terms
Find FV (No PMT)
Find N (No PMT)
Miscellaneous Problems
100

The value to which a lump sum grows over a given period at a specific interest rate

What is its future value (FV)?

100

The process of interest being earned on increasing sums of principal and interest over time

What is compounding?

100

N=10

I/YR=5%

PV=20,000

FV=32,577.89

100

I/Y=6.25%

PV=65,000

FV=89,000

N=5.183

100

FV=300,000

N=20

I/YR=12%

Find PMT

PMT=4,163.63 per year

200

The amount paid each period towards a borrowed amount or towards savings

What is a payment (PMT)?

200

A series of equal and regular savings deposits or payments

What is an annuity?

200

N=8

I/YR=3%

PV=50,000

FV=63,338.50

200

I/YR=13.5%

PV=13,000

FV=100,000

N=16.111

200

FV=400,000

N=15

I/YR=9%

PMT=10,000

Find PV

$190,422.10

300

The number of years for a present value to grow into a future value

What are compounding periods (N)?

300

The accumulation of funds needed to meet a future financial goal

What is the future value of an annuity?

300

N=15

I/YR=10%

PV=100,000

FV=417,724.82

300

I/YR=3.2%

PV=5,600

FV=12,000

N=24.195

300

FV=100,000

N=12

Inflation Rate=3%

Investment ROR=7%

Find PMT


$6,699.82 per year

400

A proportion of the amount lent, deposited, or borrowed based on the original principal

What is the interest rate (I/YR)?

400

The repayment of loan principle over time

What is amortization?

400

N=20

I/YR=7%

PV=40,000

FV=154,787.38

400

I/YR=22%

PV=10,500

FV=21,000

N=3.485

400

30 year mortgage

PV=150000

Int. Rate=3.5%

Find PMT

$673.57 per month

500

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)?

500

A document that shows how much principle and interest are being repaid with each payment

What is an amortization schedule?

500

N=50

I/YR=12%

PV=35,000

FV=10,115,076.04

500

I/YR=9.75%

PV=120,000

FV=512,000

N=15.59

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