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

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Business Math: A Step-by-Step Handbook Abridged Copyright © 2022 by Sanja Krajisnik; Carol Leppinen; and Jelena Loncar-Vines is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License, except where otherwise noted.

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