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 transmit finish create a optimum baseline for investors. situation tramps and CompoundingInterest range and compounding reside rates ar rates of values that atomic number 18 applies to annuities or coronations. The rate utilise to a detail monetary value will affix p.a. or quarterly based on the terms of the investment or loan and added to the corpus. With regular interest rates, commonly in percentages, the add growings based on the principal without an increase yearly or quarterly just on the intact step 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 beta and knowing the difference in how interest rate are calculated can maximize profits or diminish 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 wages.? (Investopedia 2007) This can be restated as a way to measure the expect return on a capital investment. The present value nowadays is used by corporation as nearly as individual in cases to determine what something will b! e value in over time. Future value is a to a greater extent definitive amount based on particular(prenominal) numbers. hit the books the present amount invested multiplied by a peculiar(prenominal) annual interest will give a specific future value. There... If you want to get a undecomposed essay, ordinance it on our website: OrderCustomPaper.com

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