5 Questions
What is the key difference between simple interest and compound interest?
Simple interest is calculated only on the principal amount, while compound interest is calculated on the principal amount and also on the accumulated interest.
What does the concept of present value represent?
The current value of a future sum of money, discounted to reflect its current worth.
In what context is the concept of annuity commonly applied?
Leasing, Capital expenditure, and Valuation of Bond.
What does the term 'effective rate of interest' refer to?
The true annual interest rate earned or paid on an investment or loan.
What does 'sinking funds' refer to in the context of business mathematics?
Funds set aside to repay a debt or replace an asset at the end of its service life.
Test your understanding of interest, annuity, and present value concepts, and their applications in finance. Explore the differences between simple and compound interest, and learn about the use of present value in leasing, capital expenditure, and bond valuation.
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