## Quiz 11 :

Compound Interest and Present Value

Answer:

The formula for calculating the number of compounding periods of a loan or an investment is

Because to find the number of compounding periods of an investment, multiply the number of years by the number of periods per year

Answer:

Interest Calculated solely on the principal is known as simple interest, where as interest calculated on the principal and previously earned interest is known as compound interest.

Because simple interest is the interest which can be calculated on the principal

The compound interest is the interest calculated on the principal and previously earned interest.

Answer:

The concept that money "now" or in the present, is more desirable than the same amount of money in the future because it can be invested and earn interest as time goes by is known as the time value of money.

Because time value of money is that idea that idea that money "now" or in the present, is more desirable that the same amount of money in the future because it can be invested and earn interest as time goes by.