Chapter 15

Working with investment formulas

In this chapter, you will:

  • Understand concepts such as compound, nominal, and effective interest rates

  • Calculate the future value of an investment

  • Learn formulas that enable you to work toward an investment goal

The time value of money concepts introduced in Chapter 14, “Building loan formulas,” applies equally well to investments. The only difference is that you need to reverse the signs of the cash values. That’s because loans generally involve receiving a principal amount (positive cash flow) and paying it back over time (negative cash flow). An investment, on the other hand, involves depositing money into the investment (negative cash flow) and then receiving interest payments (or whatever) ...

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