Copyright © 2008, The McGraw-Hill Companies, Inc.Index 659Future value, 92, 94, 122
calculating with compound interest, 93
spreadsheets for, 221–225
Future value of annuity, 142–143, 146–157
annuity factor approach, 148–152, 156
bucket approach, 147–148, 196–199
chronological approach, 147, 192–195
compounding/payment frequencies differ, 156–157
formula for, 148–149, 156
irregular payments, 192–199
nonannual annuities, 152–154
ordinary annuity, 149
total interest earned, 155
Futures, 274–275
trading profits/losses, 277–279
uses and dangers of, 294
Futures contract, 275, 474
cash settlement of, 278
Futures exchanges/market, 276G
General liability insurance, 525
Generally accepted accounting practices (GAAP), 487
Geometric mean, 297
Gift tax, 410
Golden handcuffs, 311
Grace period, 424
Graphs, 609, 612–613; see also Charts and graphs
Gross pay, 580
based on commission, 584
based on hourly rate, 582–583
based on piece rate, 583
based on salary, 581
Gross profit, 343, 487
Gross profit margin, 343, 492, 508–509
Gross revenues, 487
Gross sales, 487
Group insurance plans, 545–546
Group policy, 538
Growth rate, 121–122
Guaranteed issue, 550H
Health insurance, 537–546, 585
calculating premiums, 541–543
as employee benefit, 543–545
indemnity plans, 538–539
PPOs, HMOs, and managed care, 540–541
types of, 538–541
Health maintenance organization (HMO), 540
Health savings accounts (HSAs), 543
Hedging, 276
commodity futures, 275–276
Histograms, 613
Holdback, 342
Holiday differential, 583
Home equity line of credit, 435
Home equity loans, 434
Homeowners’ equity, 434
Homeowners’ insurance premiums, 438
Horizontal analysis, 492–494
Hospitalization policy, 538
Hourly pay, 581I
Illiquid stocks, 254
Immediate annuity, 319Immediate delivery (spot), 275
Implied grouping, 107
Implied grouping symbol, 151
Import fees, 407
Improper fractions, 15
Income and payroll taxes, 385–393
business income taxes, 393
FICA, 392–393
income tax withholding, 390–391
personal income taxes, 386–389
tax filing, 391–392
Income ratios, 508–511
conversion ratios, 510–511
effectiveness ratios, 509–510
profitability ratios, 508–509
Income statement, 486–494
basic income statement, 487
detailed statements, 489
horizontal analysis of, 492–494
vertical analysis of, 491–492
Income tax return, 391
Income tax withholding, 390–391, 584
Indemnity plans, 538–539
Index funds, 296
Index futures, 283
Index options, 283
Indexes, 620–622
Individual policy, 538
Individual retirement accounts (IRAs), 316–317
Inflation
effect of, 322–327
long-term predictions about, 323–325
projections with differing rates, 326–327
projections in today’s dollars, 324–325
Inflation-protected securities, 268
Initial margin, 279
Installment plans, 449–455
approximation formula, 453–454
APR for, 452
interest rates, 452
Rule of 78, 450–451
tables and spreadsheets for, 452
today’s market, 454–455
Insurance
defined, 523
health insurance, 537–546
law of large numbers and, 525–527
life insurance, 549–557
property, casualty, and liability insurance,
522–532
rates and underwriting, 527–529
Insurance agent/broker, 524
Insurance annuity, 142
Insurance benefit deductions, 585
Insurance department, 524
Insurance policy, 523
Insurance premiums, 541–543
Insurance rates, 527–529
Insured, 549
Insurer, 523
Interest, 57, 490; see also Compound interest;
Simple interest
actual interest earned, 73–76
defined, 3
Interest-only mortgages, 436
Interest rate risk, 267
Interest rates, 21; see also Effective interest rates
finding simple interest rate, 24–25
negative interest rates, 74
nonannual rates, 44–46
as percents, 4
rates in disguise, 66–67
secondary sales, 76, 81solving for (annual compounding), 131–132
solving for (nonannual compounding), 132
spreadsheets for, 236–238
International business, currency conversion, 468–473
Inventory, 592–599
average cost method, 593–594
cost basis, 598–599
cost of goods sold, 597–598
FIFO, 594–595
LIFO, 595–596
perpetual vs. periodic valuation, 596–597
retail method of valuation, 598
specific identification, 592–593
Inventory turnover, 510–511
Inverse correlation, 267
Investment grade, 267
Investment instruments
bonds, 263–269
commodities, options, and futures, 274–284
mutual funds and portfolios, 289–298
stocks, 250–259
Investment portfolios, 289–298
asset allocation, 293–294
asset classes, 292–293
diversification, 290–292
Invoice, 352
Invoice price, 342, 352
Irrational number, 106
Irregular payments, future values with, 192–199
Issuer, 263
Itemized deductions, 386J
Joint life, 557
Julian date, 33
Junk bonds, 267K
Keogh plans, 320L
Land contracts, 455
Lapse (of policy), 553
Last-to-die policy, 557
Law of large numbers, 525–527
Leap years, 15, 35–36
Leasing, 458–463
buying vs., 458, 462
calculating payments, 459–461
mileage limits, 461–462
other types of property, 462–463
Level term, 550
Leverage, 279
Liabilities, 499
Liabilities-to-equity ratio, 511–512
Lien, 433, 458
Life insurance, 549–557, 585
other types of, 556–557
term insurance, 550–552
universal life insurance, 554–556
whole life insurance, 552–554
LIFO (last in, last out), 595–596
Limited liability company (LLC), 251
Limited partnership, 251
Line graphs, 612–613
Liquid shares, 254
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