| Term | Definition |
|---|
| Compound interest | the situation in which interest paid on an investment during the 1st period is added to the principal. During the 2nd period, interest is earned on the original principal + the interest earned during the 1st period |
| Annuity | a sequence of equal cash flows, occurring at the end of each period |
| Annuity due | an annuity in which the payments occur at the beginning of each period |
| Perpetuity | You can think of a perpetuity as an annuity that goes on forever |
| Amortized loan | loans that are paid off with equal periodic payments |
Combine with other sets
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