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1. Is it a lump sum payment or multiple payments over a period of time. (Of course this is simplistic. To illustrate payments can be

1. Is it a lump sum payment or multiple payments over a period of time. (Of course this is simplistic. To illustrate payments can be at the beginning or end of a period or the problem could require you to use a combination of a lump sum and multiple payment). 2. What are the total number of periods involved. 3. What interest rate should be used to compound or discount the payment. To answer this question you need to understand the different interest rates (stated, nominal, market, effective) and when to use them. 4. Is this a Present or Future Value computation. Are you looking for the value of the money today or what you plan to receive or pay in the future?

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