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Compound Interest and Present Value

Learning Objectives

Note: A complete set of plastic overlays showing the concepts of compound interest and present value is found in Chapter 13.

LU 12–1: Compound Interest (Future Value)—The Big Picture
  1. Compare simple interest with compound interest.
  2. Calculate the compound amount and interest manually and by table lookup.
  3. Explain and compute the effective rate (APY).
LU 12–2: Present Value—The Big Picture
  1. Compare present value (PV) with compound interest (FV).
  2. Compute present value by table lookup.
  3. Check the present value answer by compounding.








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