Chapter 9: Key Concepts Summary
Key Concepts Summary
9.1: Compound Interest Fundamentals
- How compounding works
- How to calculate the periodic interest rate
9.2: Determining the Future Value
- The basics of taking a single payment and moving it to a future date
- Moving single payments to the future when variables change
9.3: Determining the Present Value
- The basics of taking a single payment and moving it to an earlier date
- Moving single payments to the past when variables change
9.4: Equivalent Payments
- The concept of equivalent payments
- The fundamental concept of time value of money
- The fundamental concept of equivalency
- Applying single payment concepts to loans and payments
9.5: Determining the Interest Rate
- Solving for the nominal interest rate
- How to convert a variable interest rate into its equivalent fixed interest rate
9.6: Equivalent and Effective Interest Rates
- The concept of effective rates
- Taking any nominal interest rate and finding its equivalent nominal interest rate
9.7: Determining the Number of Compounds
- Figuring out the term when n is an integer
- Figuring out the term when n is a non-integer
