Time Value of Money

Annuities and Time Value of MoneyThe purpose of this paper is give definitions of monetary name related to annuities and time assess of money and how they ar related to investitures. Knowing the financial terms and how they relate to fiscal values and the futures of those values is vital to the success of any investor. Having a deeper understanding of key financial terms related to gift finish create a optimum baseline for investors. plunk for tramps and CompoundingInterest rate and compounding reside rates ar rates of values that are applies to annuities or coronations. The rate utilise to a detail monetary value will affix per year or quarterly based on the terms of the investment or loan and added to the whizz. With regular interest rates, commonly in percentages, the count growings based on the principal without an increase per annum or quarterly just on the intact count with a future value. With the use of compounding the interest is added to the prin cipal and the amount of interest is applied to the total and recalculated victimization the change magnitude principal. Finding the best opportunity for any investment is central and knowing the difference in how interest rate are calculated can maximize profits or minimise cost.

Present Value and Future ValuePresent Value is defines as ?the amount that a future sum of money is expense straight off given a specified rate of crop.? (Investopedia 2007) This can be restated as a way to measure the expect return on a capital investment. The present value straight off is used by corporation as nearly as individua l in cases to determine what something will ! be cost in over time. Future value is a more than definitive amount based on particular proposition numbers. ram the present amount invested multiplied by a specialised annual interest will give a specific future value. There... If you want to get a undecomposed essay, put together it on our website: OrderCustomPaper.com

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