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    Accumulated Value) of A Loan or Investment (Compounding Frequency)

    Uploaded by

    Ega Prima
    This document defines the key terms and formulas used in compound interest calculations. It provides the formulas to calculate the future value, present value, nominal interest rate, number of compounding periods, amount of compound interest, time period, periodic interest rate, effective interest rate, and conversions between periodic and nominal interest rates.

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    © All Rights Reserved
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    Accumulated Value) of A Loan or Investment (Compounding Frequency)

    Uploaded by

    Ega Prima
    17 views1 page
    This document defines the key terms and formulas used in compound interest calculations. It provides the formulas to calculate the future value, present value, nominal interest rate, number of compounding periods, amount of compound interest, time period, periodic interest rate, effective interest rate, and conversions between periodic and nominal interest rates.

    Original Description:

    Statistic Formulas for business statistics

    Original Title

    Statistic Formulas

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    This document defines the key terms and formulas used in compound interest calculations. It provides the formulas to calculate the future value, present value, nominal interest rate, number of compounding periods, amount of compound interest, time period, periodic interest rate, effective interest rate, and conversions between periodic and nominal interest rates.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    17 views1 page

    Accumulated Value) of A Loan or Investment (Compounding Frequency)

    Uploaded by

    Ega Prima
    This document defines the key terms and formulas used in compound interest calculations. It provides the formulas to calculate the future value, present value, nominal interest rate, number of compounding periods, amount of compound interest, time period, periodic interest rate, effective interest rate, and conversions between periodic and nominal interest rates.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 1

    NOTATION

    FV = Future value (maturity value or


    accumulated value) of a loan or investment

    m = Number of compounding periods per year


    (compounding frequency)

    PV = Present value (discounted value or principal


    amount) of a loan or investment

    n = Number of compounding periods during the


    term

    I = Amount of compound interest of a loan or


    investment

    t = Time period or term in years

    j = Nominal (stated or quoted) annual interest rate

    f = Effective interest rate (annually compounding


    rate)

    i = Periodic rate of interest (interest rate per


    compounding period)
    FORMULAS
    Future Value | 9.1(a)

    FV =PV (1+ i)n


    Present Value | 9.1(b)

    PV =

    FV
    PV =FV (1+i)n
    n
    (1+i)

    Nominal Interest Rate | 9.5(b)

    j=mi

    Number of Compounding Periods | 9.6(a)

    ln
    n=

    Amount of Compound Interest | 9.1(c)

    ( FV
    PV )

    ln (1+i)

    I =FV PV

    Time Period in Years | 9.6(b)


    Periodic Interest Rate | 9.1(d)

    i=

    j
    m

    t=

    n
    m

    Effective Interest Rate | 9.7


    Number of Compounding Periods | 9.1(e)

    f =(1+i)m 1

    n=mt

    Equivalent Periodic Interest Rate | 9.8(a)


    Periodic Interest Rate | 9.5(a)

    FV
    PV

    1
    n

    ( ) 1

    i=

    i 2=(1+i 1)m 1 /m 2 1

    j 2=m2 i 2

    Equivalent Nominal Interest Rate | 9.8(b)

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