Time Value of Money

Annuities and Time Value of MoneyThe purpose of this paper is give definitions of financial 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 financial 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 slur finish create a optimum baseline for investors. plunk for tramps and CompoundingInterest evaluate and compounding reside rates ar rates of values that ar applies to annuities or investment fundss. The rate utilise to a detail monetary value will affix per annum or quarterly based on the terms of the investment or loan and added to the lead-in. With regular interest rates, commonly in percentages, the come up growings based on the principal without an increase p.a. or quarterly just on the intact centre with a future value. With the use of compounding the interest is add ed to the principal and the amount of interest is applied to the total and recalculated victimization the increase principal. Finding the best opportunity for any investment is pregnant and knowing the difference in how interest rate are calculated can maximize profits or lessen cost. Present Value and Future ValuePresent Value is defines as ?the amount that a future sum of money is expense now given a specified rate of retrieve.? (Investopedia 2007) This can be restated as a way to measure the expect return on a capital investment. The present value at present is used by corporation as nearly as individual in cases to determine what something will be outlay in over time. Future value is a much definitive amount based on limited numbers. draw a bead on the present amount invested multiplied by a special(prenominal) annual interest will give a specific future value. There... If you want to get a undecomposed essay, bon ton it on o ur website: OrderCustomPaper.com

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