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If the value of the principal today is $25,000 and the interest rate is 22.5%,what is the value of the principal at the end of one year?
Method
A systematic way of accomplishing something. In a financial context, this could refer to a specific approach or procedure adopted for accounting or analysis purposes.
Average Rate of Return Method
A method of evaluating capital investments by calculating the average annual profit expected from the investment and dividing it by the initial investment cost.
Present Value
The contemporary valuation of a future money sum or cash flow series, based on a predetermined return rate.
Time Value
The idea that having money now is more valuable than having the same sum in the future because of its ability to generate earnings.
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