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Class: FIN 3311 - CORPORATE FINANCIAL ANALYSIS; Subject: FINANCE; University: St. John's University-New York; Term: Fall 2014;
Typology: Quizzes
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TERM 1
DEFINITION 1 refers to the amount of money an investment will grow to over some period of time at some given interest rate. future value is the cash value of an investment at some time in the future. TERM 2
DEFINITION 2 what will you have after two years, assuming interest rate does not change? if you leave 110 in the bank, you earn 110 times. 1 equals 11 in interest during the second year, so you have 110 plus 11 equals 121.100 principal10 in interest you earn first year10 you earn int he second year 120. TERM 3
DEFINITION 3 the process of leaving your money and any accumulated interest in an investment for more than one period, then reinvesting the interest. it means earning interest on interest. TERM 4
DEFINITION 4 interest not reinvested. interest is earned each period only on the original principal. TERM 5
DEFINITION 5 121 future value=110 times 1.1(100 times 1.1) times 1.1100 times (1.1 times 1.1)100 times 1.1 squared100 times 1.21in two years we invest 121 for one period at 10 percent. we end up with 1.1 for eveyr dollar we invest or 121 times 1.1 equals 133.1133.1= times 1.1(110 times 1.1) times 1.1(100 times 1.1) times 1.1 times 1.1100 times(1.1 times 1.1 times 1.1)100 times 1.1 to the 3 power100 times 1.331future value=1 dollar plus(1 plus r) to the t power. future value of interest factor.