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Table of Contents iii

CHAPTER 8 Compound Interest
Let’s get personal (2) — Value of a 10% savings retirement plan (2) — COMPOUND INTEREST
(3) — Calculating Compound Interest (3)— ODER OF OPERATIONS (4) — Using a Compound-
Interest Table (Table 8.1) and Compound Interest Factors (7) — The Algorithm (8) — Calculating
Compound Interest Value for interest factor not in the table (9) — Determining Amounts for Periods
Not in the Table (10) — Daily Compounding of Interest (11) — Using an MS EXCEL spreadsheet to
calculate daily interest values (13) — Nominal and Effective Rates of Interest (15) — Computing
Present Value at Compound Interest (17) — Present Value – Future Value Equations (18) — How to
Calculate Present Value (18) — What Does Present Value Tell You? (18) — Interest Rate or Rate
of Return (18) — The Future Value equation is: (18) — Inflation affects Purchasing Power (19) —
Compound Discount (20) — Using a Present-Value of a future value Table (20) — Homework 8-1
(27) — Homework 8-2 (31)

CHAPTER 9 Annuities, A Function of Compound Interest
ANNUITIES a Function of Compound Interest (1) — Advantages of Annuities (2) — 1. Tax
Deferral (2) — 2. Guaranteed Payout (2) — 3. Protection from Probate and Creditors (2) — 4.
Exemption from FAFSA Asset Status (2) — Disadvantages of Annuities (2) — 1. Costs and Fees (2)
— 2. Illiquidity (3) — 3. Complexity (3) — 4. Taxation (3) — Ordinary Annuity (3) — Calculating
the Amount of an Ordinary Annuity by Using an Annuity Table (4) — Present Value of an Ordinary
Annuity (4) — How is the present value of an annuity calculated? (5) — Annuities Due (8) — What
is the difference between ordinary annuity and annuity due? (8) — ANNUITY DUE PAYMENT
EQUATION (9) — Example of the Annuity Due Payment Equation using Present Value (9) — How
is the Annuity Due Payment from Present Value Equation Derived? (10) — Change negative
exponent to a positive value (10) — Using Table 9.1 to calculate the values for an Annuity Due (14)
— Calculating the Present Value of an Annuity Due (14) — Homework 9-1 (23)

CHAPTER 10 Credit
Capitalism vs. Socialism with Credit (2) — PERSONAL LOANS AND BUSINESS CREDIT (2)
— Credit Cards (3) — Finance Charges are on the Previous Balance (4) — Average Daily Balance
Finance Charge (5) — Cash Advance and Finance Charge on Average Daily Balance (5) —
Installment Credit (7) — Calculating the Additional Cost of Installment Buying (7) — Calculating
the Monthly Payment (8) — Loan Payment Structures and Payoff (8) — Life of Loans as Liabilities
(10) — Accounts Payable (10) — Notes payable (10) — Mortgages (10) — Fully Amortized Loans
(10)— Calculating the periodic payment for a Fully Amortized loan (11) — Standard Loan Payment
(11) — Use of Loan Payment Equation (11) — CALCULATING LONG-TERM DEBT,
MORTGAGES (12) — Calculating Principal & Interest on a Mortgage (12) — Mortgage Types:
Fixed and Variable Rate (12) — Calculating Principal and Interest (12) — Preparing a Loan
Payment Schedule (14) — Arithmetic for the Monthly Payment equation (14) — Factoring an
exponent (17) — Using Tables to calculate monthly payment and interest (18) — Calculating the
Monthly Payment using Interest Rate Charts (18) — Interest Rate Factors, Table 10.1 (19) —
Building a Loan Payment Schedule (20) — ANNUAL PERCENTAGE RATE (APR) (21) —
Calculating Annual Percentage Rate (APR) (22) — Homework 10-1 (33)

CHAPTER 11 Credit Supplement
How to build Loan Payment Calculator with MS Excel
Use the Standard Loan Payment Equation (2) — Building a Loan Payment Calculator in Excel (2)
— Loan Payment Schedule (10) — Labeling Cells (11) — LAST INSTRUCTION: SAVE THE
FILE! (20) — Homework 11-1 (21)