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Compound Interest
The interest on a loan or deposit calculated based on both the initial principal and the accumulated interest from previous periods.
Present Value
The assessed current value of a future monetary amount or series of financial flows, at a given rate of return.
Compound Interest
Refers to the addition of interest to the principal sum of a loan or deposit, where the added interest also earns interest from then on. This effect makes a sum grow at a faster rate compared to simple interest, which is calculated only on the principal amount.
Present Value
The current value of a future cash amount or ongoing cash flows, when calculated with a specific return rate.
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