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Note for Simple Interest - SI by Placement Factory

  • Simple Interest - SI
  • Note
  • Quantitative Aptitude
  • Placement Preparation
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Lecture Notes on Simple Interest, Compound Interest, and Future Values By Dr. Mohammad Al-Khaleel Yarmouk University - Jordan Lecture Notes on Simple Interest, Compound Interest, and Future Values – p.1/24

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Outcomes • • • Understanding what is meant by "the time value of money". Understanding the relation between present and future values. Calculating the simple and compound interests and the corresponding future and present values of an amount of money invested today. Lecture Notes on Simple Interest, Compound Interest, and Future Values – p.2/24

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Outline • • • • Time value of money and interest The simple interest; Present and Future values The compound interest; Present and Future values Compounding more than once a year Lecture Notes on Simple Interest, Compound Interest, and Future Values – p.3/24

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Time Value of Money and Interest • • Which would you prefer $10000 Today or $10000 in 5 years? Obviously, $10000 today; you already recognize that there is time value of money. If you put some money on a bank account for a year, then the bank can do whatever it wants with that money for a year; RIGHT? To reward you for that, the bank pays you some interest. The more years the bank works with your money, the more rewards you would expect to get as an accumulated interest! Lecture Notes on Simple Interest, Compound Interest, and Future Values – p.4/24

Lecture Notes