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1. What is the Future value formula?
• FV= Future value
• PV=Present Value
• r= rate as a decimanl
• n=no. of time periods
2. What is the present value formula?
• PV= Present Value
• FV= Future Value
• r= rate of interst
• n= no. of time periods
3. What is the formula for the Future Value of an annuity where payments are made at the end of the time period?
• FV= Future value of annuity
• C=the amount of payments per time period
• r= rate of interest
• n= no. of time periods
4. What is the formula for the future vale of annuity at the start of the time period?
5. What is the formulas for the Present Value of annuity at the end of the time period?
6. What is the formula for the present value of an annuity where payments are made at the start of the term?
7. What is the formula for the Present Value of a perpetuity?
• C= Constant dollar amount per time period
• r= rate of interst
8. What is the formula for effective annual rate?
• q=rate quoted for customer
• m=method of compounding
9. What relation does present value have to future value?
• The present value is the inverse of the future value
10. What do you assume unless told otherwise with Time value?
Always assume payments are at the end of the time period unless told otherwise in the question.
11. What are the three basic types of loans?
• Pure discount loans
• Interest only loans
• Amortized loans
12. What affect does inflation have on the value of money?
• It has a negative effect to be received in the future.
• Inflation adjusted rate=quoted rate-inflation rate
13. What are the steps to calculating average annual return?
• 1. Find the return relative for each year (1+r)
• 2.Find the product of all returns relative
• 3. Depending on the no. of years return x√