Chapter 6: Compound Interest
Outline of Chapter Topics
6.1 Compound Interest and Fundamentals
6.2 Determining the Future (Maturity) Value
6.3 Determining the Present Value
6.5 Determining the Interest Rate
Learning Objectives
- Differentiate between the concept of compound interest and simple interest.
- Calculate the future value and present value of investments and loans in compound interest applications using both the algebraic and financial calculator methods.
- Calculate equivalent payments that replace another payment or a set of payments.
- Calculate the effective and equivalent interest rates for nominal interest rates.
- Calculate periodic and nominal interest rates.
- Calculate the number of compounding periods and time period of an investment or loan.
Attribution
“Chapter 9” from Business Math: A Step-by-Step Handbook Abridged 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.
