Examlex
A company that can build a project that will cost $50,000, but returns $52,000 in one year would make a good decision by turning this project down if the interest rate were 3 percent.
Ordinary Annuity
A series of equal payments made at equal intervals of time, with the first payment occurring at the end of the period.
Present Value
The current value of a future sum of money or stream of cash flows given a specified rate of return.
Compounded Quarterly
The method of calculating interest where the interest is added to the principal sum four times a year.
Compounded Annually
A method of calculating interest where the interest earned over a year is added to the principal, and the sum becomes the principal for the next year.
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