FD NBUSM: BUSINESS MATH & FINANCE || QUIZ #2 FORMULAS

From Lecture “Deposit”

Future value
Annuity Formulas Future tense

Present Value of −𝑛
1−(1+𝑖)
Ordinary Annuity 𝐴 = 𝑅[ 𝑖
] Solving for t (Ordinary Annuity)
Formula (A)
Solving for time t −𝑛
1 − (1+𝑖)
Amount of Ordinary 𝑛
(1+𝑖) −1 given the Present 𝐴 = 𝑅[ 𝑖
]
Annuity (S) 𝑆 = 𝑅[ 𝑖
] Value A

➡️
Future Value 𝐴𝑖
𝑙𝑜𝑔(1− 𝑅
)
If the Value of S/A is present (Relationship between A & S) 𝑛 = − 𝑙𝑜𝑔 (1+𝑖)
𝐴𝑖
𝑙𝑜𝑔(1− 𝑅 )
−𝑛 𝑡 = −
𝐴 = 𝑆(1 + 𝑖) 𝑚𝑙𝑜𝑔 (1+𝑖)
𝑛
𝑆 = 𝐴(1 + 𝑖) Solving for time t (1+𝑖) −1
𝑛

given the Amount 𝑆 = 𝑅[ 𝑖

]
S
Cash Value or Cash Price

Cash Price = Downpayment + A

𝑛 =
𝑙𝑜𝑔(1+
𝑙𝑜𝑔 (1+𝑖)
𝑆𝑖
𝑆𝑖
𝑅
)
➡️
or 𝑙𝑜𝑔(1+ 𝑅 )
CP = DP + A 𝑡 = 𝑚𝑙𝑜𝑔 (1+𝑖)

Amount of an Annuity at Any Time (Sk)

Solving for Rate j (Ordinary Annuity)
𝑘
(1+𝑖) −1 If A is
𝑆𝑘 = 𝑅[ 𝑖
]
given 2 2 𝑛𝑅
k = number of deposits or payments made (𝑛 − 1)𝑖 + 6(𝑛 + 1)𝑖 + 12(1 − 𝐴
) = 0

Remaining Liability
If S is 2 2 𝑛𝑅
Remaining Liability just −(𝑛−𝑘) (𝑛 − 1)𝑖 − 6(𝑛 − 1)𝑖 + 12(1 − 𝑆
) = 0
1−(1+𝑖) given
after the kth payment 𝑅𝐿𝑘 = 𝑅[ 𝑖
]
(RLk)
2
Remaining Liability just 𝑎𝑖 + 𝑏𝑖 + 𝑐 = 0
2
before the kth payment 𝑖 =
−𝑏± 𝑏 − 4𝑎𝑐
(kRL) 𝑘
𝑅𝐿 = 𝑅 + 𝑅𝐿𝑘 2𝑎
𝑗
𝑖 = 𝑚
𝑗 = 𝑖𝑥𝑚

Periodic Payments (Ordinary Annuity) Annuity Due

Periodic Payment given

the Present Value A 𝐴 = 𝑅[
1−(1+𝑖)
𝑖
−𝑛
] ➡️ Present Value of
Annuity Due (Ä)
Ä = 𝑅 + 𝑅[
1−(1+𝑖)
𝑖
1−(1+𝑖)
−(𝑛−1)

−(𝑛−1)
] ▶️
Ä = 𝑅[1 + ]

▶️
“amount borrowed” 𝑖
Loan
“borrows” 𝐴𝑖 𝑖+1−(1+𝑖)
−(𝑛−1)
“Loan” 𝑅 =[ −𝑛 ] Amount Borrowed (owes, settle
obligation)
Ä = 𝑅[ 𝑖
]
“Amortization 1 − (1+𝑖) Cash Price −(𝑛−1)
“Debt” (1+𝑖)−(1+𝑖)
“Cash Price”
Ä = 𝑅[ 𝑖
]
Present value −𝑛
1−(1+𝑖)
Ä = 𝑅 ](1 + 𝑖)

➡️
𝑖
Periodic Payment given 𝑛 −𝑛
1−(1+𝑖)
(1+𝑖) −1 𝑅[ ] =𝐴
the Amount S 𝑆 = 𝑅[ 𝑖
] 𝑖
Ä = 𝐴(1 + 𝑖)
𝑆𝑖
“future fund” 𝑅 = 𝑛 ]
“to create a fund” (1+𝑖) −1
FD NBUSM: BUSINESS MATH & FINANCE || QUIZ #2 FORMULAS

Amount of an Annuity 𝑆̈ = 𝑅[
(1+𝑖)
(𝑛+1)
−1
] −𝑅 ▶️ (1 + 𝑖) = 1 +
𝑆̈𝑖

➡️
Due (S̈) 𝑖 𝑅(1+𝑖)
(𝑛+1)
(1+𝑖) −1 𝑆̈𝑖
𝑆̈ = 𝑅[ − 1]
𝑛𝑙𝑜𝑔(1 + 𝑖) = 𝑙𝑜𝑔(1 + )
▶️
𝑖
Fund to be created (𝑛+1) 𝑅(1+𝑖)
Money to be received in the future (1+𝑖) −1−𝑖
𝑆̈ = 𝑅[ 𝑖
] −𝑅 𝑙𝑜𝑔(1+
𝑆̈𝑖
)
𝑅(1+𝑖)
𝑆̈ = 𝑅[
(1+𝑖)
(𝑛+1)
−(1+𝑖)
]
𝑛= 𝑙𝑜𝑔(1+𝑖)
𝑖
𝑛
(1+𝑖) −1
𝑆̈ = 𝑅[ 𝑖
](1 + 𝑖) 𝑆̈𝑖
𝑙𝑜𝑔(1+ 𝑅(1+𝑖) )
𝑆̈ = 𝑆(1 + 𝑖) 𝑡= 𝑚𝑙𝑜𝑔(1+𝑖)
If the Value of S̈/Ä is present (Relationship Between Ä and S̈)

−𝑛
Ä = 𝑆̈(1 + 𝑖)
𝑆̈ = Ä(1 + 𝑖)

Periodic Payments (Annuity Due)

Periodic Payment
given the Present
Value Ä
Ä = 𝑅[
1−(1+𝑖)
𝑖
−𝑛
](1 + 𝑖) ▶️
Ä𝑖
𝑅 = −𝑛
[1−(1+𝑖) ](1+𝑖)

Periodic Payment
given the Amount
S̈
𝑆̈ = 𝑅[
(1+𝑖) −1
𝑖
𝑛
](1 + 𝑖) ▶️
𝑆̈𝑖
𝑅 = 𝑛
[(1+𝑖) −1](1+𝑖)

Solving for t (Annuity Due)

Solving for
time t given
the Present
Ä = 𝑅[
1 − (1+𝑖)
𝑖
−𝑛
](1 + 𝑖) ➡️
Ä𝑖 −𝑛
Value Ä 𝑅(1+𝑖)
= 1 − (1 + 𝑖)

(1 + 𝑖)
−𝑛
= 1 −
Ä𝑖
𝑅(1+𝑖)
➡️
Ä𝑖
𝑙𝑜𝑔(1 − 𝑅(1+𝑖)
)

Ä𝑖
− 𝑛𝑙𝑜𝑔(1 + 𝑖) = 𝑙𝑜𝑔(1 − )

➡️𝑛 =−
𝑅(1+𝑖)
Ä𝑖
𝑙𝑜𝑔(1− 𝑅(1+𝑖) )
𝑙𝑜𝑔(1+𝑖)

Ä𝑖
𝑙𝑜𝑔(1− 𝑅(1+𝑖) )
𝑡 =− 𝑚𝑙𝑜𝑔(1+𝑖)

Solving for
time t given
the Amount
𝑆̈ = 𝑅[
1 − (1+𝑖)
𝑖
𝑛
](1 + 𝑖) ➡️
𝑆̈𝑖 𝑛
S̈ 𝑅(1+𝑖)
= (1 + 𝑖) − 1

1+
𝑆̈𝑖
𝑅(1+𝑖)
= (1 + 𝑖)
𝑛
➡️
 FD NBUSM: BUSINESS MATH & FINANCE || QUIZ #2 FORMULAS

If F is given: 2 2 𝐴𝑛
From YouTube (𝑛 − 1)𝑖 + 6(𝑛 + 1)𝑖 + 12(1 − 𝐹
)=0
Ordinary Annuity
To compute 2
−𝑏± 𝑏 −4𝑎𝑐
for i, use the 𝑖= 2𝑎
the quadratic
formula.

Annuity Due

Finding the Number of Payments of an Ordinary Annuity

Future Value

𝑛 Dividing both side by A, and

(1+𝑖) −1
𝐹=𝐴 𝑖 multiplying both sides by i.

𝐹𝑖 𝑛 Adding 1 to both sides.

𝐴
= (1 + 𝑖) − 1

𝐹𝑖 𝑛 Taking the logarithm of

𝐴
+ 1 = (1 + 𝑖) both sides.

𝐹𝑖 𝑛 or
𝑙𝑜𝑔( 𝐴
+ 1) = 𝑙𝑜𝑔(1 + 𝑖)

𝐹𝑖 Dividing both sides by log

𝑙𝑜𝑔( 𝐴
+ 1) = 𝑛𝑙𝑜𝑔(1 + 𝑖) (1+i).

𝐹𝑖
𝑙𝑜𝑔( 𝐴
+1)
𝑛= 𝑙𝑜𝑔(1+𝑖)

Present Value

−𝑛 Dividing both side by A, and

1−(1+𝑖)
𝑃=𝐴 𝑖 multiplying both sides by i.

−𝑛 −𝑛
𝑃𝑖 Adding (1 + 𝑖) and
𝐴
= 1 − (1 + 𝑖) 𝑃𝑖
− 𝐴 to both sides.

−𝑛 𝑃𝑖 Taking the logarithm of

(1 + 𝑖) =1− 𝐴 both sides.

−𝑛 𝑃𝑖 or
𝑙𝑜𝑔(1 + 𝑖) = 𝑙𝑜𝑔(1 − 𝐴
)

𝑃𝑖 Dividing both sides by

− 𝑛𝑙𝑜𝑔(1 + 𝑖) = 𝑙𝑜𝑔(1 − 𝐴
) − 𝑙𝑜𝑔(1 + 𝑖).

𝑃𝑖
𝑙𝑜𝑔(1− 𝐴
)
𝑛= −𝑙𝑜𝑔(1+𝑖)

Determining the Interest Rates of an Ordinary Annuity

If P is given: 2 2 𝐴𝑛
(𝑛 − 1)𝑖 + 6(𝑛 + 1)𝑖 + 12(1 − 𝑃
)=0