Term
| How is simple interest computed |
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Definition
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Term
| How is compound interest computed |
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Definition
1. On principle
2. On interest earned to date |
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Term
| Which type of interest is used in normal business situations? |
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Definition
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Term
| Variables fundamental to compund interest. |
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Definition
1. Rate of interest
2. Number of time periods
3. Present Value
4. Future Value |
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Term
What does an annunity require?
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Definition
1. Periodic payments or reciepts (called rents of the same amount).
2. The same-length interval between such rents
3. Compounding of interest once each period |
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Term
When do rents occur for an ordinary annunity
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Definition
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Term
When do rents occur for an annunity due?
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Definition
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Term
| Is there interest during the first period of an ordinary annunity? |
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Definition
| No. Rents are at the end of each period. |
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Term
| When do rents occur during an annunity due. |
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Definition
At the beginning of each period.
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Term
| Does interest accumulate during the first period of an annunity due? |
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Definition
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Term
| Which has more interest periods, ordinary annunity of annunity due? |
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Definition
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Term
| When do rents occur for a defered annunity? |
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Definition
| After a specified number of periods. |
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Term
| how is a defered annunity future value calculated. |
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Definition
| Calculated the same as a regular future value annunity. |
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Term
| How is present value of a defered annunity calculated? |
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Definition
| Must recognize the interest that occurs during the defferal period. |
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