25 terms

# Chapters 1.6, 1.7, 1.9-1.12 Test Vocabulary

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capitalization
The process of evaluating the future value of money worth a given sum today at some point in the future.
discounting
The prcoess of evaluating the present value of money with a stated future value.
present value
The value today (at time t=0) of an investment or loan.
future value
The _____________ of an investment or loan at a specified time, t, is the sum of the present value plus all interest accumulated during the specified time. ___________ at time t is denoted as F(t).
APR (annual percentage rate)
When the interest rate is reported as the annual interest rate (in decimal form) or ________________ (in percentage form), it refers to the increase that is earned on the principal only. This annual interest rate is also referred to as the nominal rate (in decimal form).
simple interest
The accumulated interest I after t years an an annual interest rate r on a present value of P dollars is calculated as I(t)= Prt dollars.
compounding
Occurs when interest is earned (or charged) on previous interest.
APY (annual percentage yield)
The decimal form of _________________ is the effective rate of interest.
fixed costs
Costs that remain constant no matter how much merchandise is produced.
variable costs
Costs that change depending on the number of units produced.
total cost
The sum of fixed cost and variable cost.
average cvst
The total cost divided by the number of items produced.
revenue
The product of selling price per unit and the number of units sold.
profit
The difference between revenue and cost.
break-even point
The point at which total cost is equal to total revenue. This occurs when profit is exactly zero.
Used to create total cost, C.
function multiplication
Used to create variable cost, V.
function subtraction
Used to create profit, P.
function division
Used to create average cost, C.
function composition
A method of constructing functions that uses the output of one function as the input of another.Two outputs, f and g, can be combied using _______________ if the output from one function, f, can be used as input to the other function, g. In _______________, the unit of measure for the output of function f must be identical to the unit of measure for the input of function g.