| future value (FV) | The amount an investment is worth after one or more periods.
|
 |
|
|
| compounding | The process of accumulating interest on an investment over time to earn more interest.
|
|
|
|
| interest on interest | Interest earned on the reinvestment of previous interest payments.
|
|
|
|
| compound interest | Interest earned on both the initial principal and the interest reinvested from prior periods.
|
|
|
|
| simple interest | Interest earned only on the original principal amount invested.
|
|
|
|
| present value (PV) | The current value of future cash flows discounted at the appropriate discount rate.
|
|
|
|
| discount | Calculate the present value of some future amount.
|
|
|
|
| discount rate | The rate used to calculate the present value of future cash flows.
|
|
|
|
| discounted cash flow (DCF) valuation | Calculating the present value of a future cash flow to determine its value today.
|