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Simple interest

WHAT ABOUT FINanNCIG. Compound interest. Simple interest. annuities. Single sum. Simple interest. what is a simple interest ? A simple interest is the interest rate which isn’t compounded for specific years. and we can compute it easily . How to compute (fv & pv ) in this case????

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Simple interest

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  1. WHAT ABOUT FINanNCIG Compound interest Simple interest annuities Single sum

  2. Simple interest what is a simple interest? A simple interest is the interest rate which isn’t compounded for specific years. and we can compute it easily . How to compute (fv & pv) in this case???? Fv = Pv * (1+ n *r ) Pv= Fv / (1+ n *r )

  3. Compound interest Compound interest: A compound interest is the interest rate which is compounded at each specific period. and this rate will increase the value at the end of the period, more than the simple interest rate.

  4. Single sum: In this case we meant by a single sum ,that when a complete payment will be paid after a specific period; and this payment mustn’t be divided into more than one payment; at that case we call it annuities.

  5. Annuities Ordinary annuity: This will be paid at the end of each year "period”. Note :If we pay at the beginning of each year we’ll call it “Annuity Due”.

  6. Present value: A present value “for single sum” is the amount of money at time ‘0’,’principal’ We can compute the present value for a single sum by using this formula: PV = FV/(1+r)^n where: PV : present value. FV : future value. R: interest rate. N: number of periods.

  7. Future value Future value: is the amount of money after a specific time of periods. We can compute the future value for “single sum” by using this formula: FV=pv *(1+r)^n where : Fv: the amount of money after a specific time of periods. Pv: the amount of money at time’0’. R: interest rate. N: number of periods.

  8. Fv for annuities Fv for annuities: is the amount of money which will divided into more than one payment through a specific period. We can compute it by using this formula: Fv= PMT * ((1+r)^n -1) /r where: Fv: the future value PMT : the amount of money which will be paid as payments. R: interest rate. N: number of periods.

  9. Pv for annuities Present value for annuities: is the amount of money at time ‘0’ but this amount will be compounded and divided into payments. This amount can be computed by using this formula: Pv= PMT *( 1 - (1-r)^- n ) / r where: Pv: present value. PMT: Payments. R: interest rate. N: number of periods.

  10. qu: A: Your rich uncle promise you to give you 1000$ for each of the next 5year And 100000$ at the end of the tenth year > B: Your rich uncle promise you to give you 300000 after 20 year Using intrest rate 8% Any option is best for you ?

  11. Prepared by : Maysa Arafat & ShadenDaghlas For: IT Infrastructure course. Supervised by : Miss .. NajwanDeleq.

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