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Issues in Economics Today
Issues in Economics Today
Robert Guell, Indiana State University
Interest Rates and Present Value

Key Terms


interest rate  The percentage, usually expressed in annual terms, of a balance that is paid by a borrower to a lender that is in addition to the original amount borrowed or lent.
nominal interest rate  The advertised rate of interest.
present value  The interest-adjusted value of future payment streams.
real interest rate  The rate of interest after inflation expectations are accounted for; the compensation for waiting to consume.




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