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When manufacturing computer software,suppose that Microsoft Inc.uses labor and materials whose costs are denominated in dollars and francs respectively.If the dollar's exchange value depreciates 10 percent against the franc,the franc-denominated cost of the firm's software falls by 10 percent.
Compound Interest
A method where interest is calculated not just on the initial amount invested or borrowed, but also on the interest that has been accumulated over previous periods, for either savings or loans.
Discount Rate
The rate of interest that is applied to find out the present value of cash flows predicted in the future, within the framework of discounted cash flow analysis.
Present Value
The monetary valuation presently of a future sum of money or ongoing cash flows, considering a predetermined rate of return.
Interest Rate
The amount charged by a lender to a borrower for the use of assets, expressed as a percentage of the principal, typically on an annual basis.
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