Number of Periods
The number of periods corresponds to the number of times the interest is accrued.
Learning Objective

Define what a period is in terms of present value calculations
Key Points
 A period is just a general term for a length of time. It can be anything one month, one year, one decade but it must be clearly defined and fixed.
 For both simple and compound interest, the number of periods varies jointly with FV and inversely with PV.
 The number of periods is also part of the units of the discount rate: if one period is one year, the discount rate must be defined as X% per year. If one period is one month, the discount rate must be X% per month.
Term

period
The length of time during which interest accrues.
Full Text
In , nrepresents the number of periods. A period is just a general term for a length of time. It can be anything one month, one year, one decade but it must be clearly defined and fixed. The length of one period must be the same at the beginning of an investment and at the end. It is also part of the units of the discount rate: if one period is one year, the discount rate must be defined as X% per year. If one period is one month, the discount rate must be X% per month.
FV of a single payment
The PV and FV are directly related.
The number of periods corresponds to the number of times the interest is accrued. In the case of simple interest the number of periods, t, is multiplied by their interest rate. This makes sense because if you earn $30 of interest in the first period, you also earn $30 of interest in the last period, so the total amount of interest earned is simple t x $30.
Simple interest is rarely used in comparison to compound interest . In compound interest, the interest in one period is also paid on all interest accrued in previous periods. Therefore, there is an exponential relationship between PV and FV, which is reflected in (1+i)^{n }.
Car
Car loans, mortgages, and student loans all generally have compound interest.
For both forms of interest, the number of periods varies jointly with FV and inversely with PV. Logically, if more time passes between the present and the future, the FV must be higher or the PV lower (assuming the discount rate remains constant).
Key Term Reference
 Interest
 Appears in these related concepts: Interest Compounded Continuously, Accounting for Interest Earned and Principal at Maturity, and Tax Considerations
 compound interest
 Appears in these related concepts: Understanding the Cost of Money, MultiPeriod Investment, and ProblemSolving
 discount
 Appears in these related concepts: The Discount Rate, Par Value at Maturity, and Present Value, Multiple Flows
 discount rate
 Appears in these related concepts: Discounted Cash Flow Approach, The Discount Rate, and The Federal Reserve and the Financial Crisis of 2008
 interest rate
 Appears in these related concepts: Greenspan Era, The Financial Account, and Determinants of investment
 investment
 Appears in these related concepts: Functions of Corporate Finance, The Role of the Financial System, and GDP Equation in Depth (C+I+G+X)
 simple interest
 Appears in these related concepts: Calculating Future Value, Calculating Present Value, and MultiPeriod Investment
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