Math 253 - Formulas

= = =

= + = +

1
0
) 1 (
1
1
) 1 ( ) 1 (
) (
) (
) ( dt
p
p
m
m
t
e e
p
d
d m
i
i

i
i
d
+
=
1

d
d
i

=
1

v iv d = = 1
i
v
a
n
n

=
1
n
n
n
n
i a
i
i
S ) 1 (
1 ) 1 (
+ =
+
=
m n m n
m
a a a v =
+
) 1 ( i a a
n n
+ = ) 1 ( i S S
n n
+ =

m n m
n
n
S S i S = +
+
) 1 (

k a where
n k
k n
i
n
=
+

) 1 (
) ( 2
r
m
m
n
j
j n
m
i
j where
j
v
a

+ =

=
) (
1
1
m = # interest conversion periods/year, r = #
payments/year

+
= + =
n n
t
n
i
dt i S
0
1 ) 1 (
) 1 (

Annuities increasing in arithmetic progression

i
nv a
Q Pa v p
n
n
n

+ = . .

i
n S
Q PS v a
n
n

+ = . .
perpetuity
2
i
Q
i
P
+ =
i
nv a
IA
n
n
n

=

) (
i
n S
IS
n
n

=

) (
i
a n
DA
n
n

= ) (
i
S i n
DS
n
n
n
+
=
) 1 (
) (
Annuities increasing in geometric progression
n
k i
i
k
v p

+
+

=
1
1
1
. .

k i
k i
v a
n n

+ +
=
) 1 ( ) 1 (
. . Perpetuity
k i
v p

=
1
. .
Discounted Cash Value
t
n
t
t
R v i P

=
=
0
) (
n
n k n
Xv a a + =
+
1 +
+
+ =
n
n k n
Xv a a
Last payment at time n
Last payment at time n+1
! " ! 1
dt v
v
a
n
t
n
n
=

=
0
1

#einvestment #ates $nvest %1 at i , int reinvested at &

j n
iS i + = + 1 ) 1 )( 1 ($
$nvest 1 at end o' each period

+ =

j
n S
i n S
j n
i n

#epayment o' loan j n
n
S
a
i
1
) 1 )( 1 ($ = +
Dollar (eighted r o' r

t
t
t C A
I
i
) 1 (
)ime (eighted r o' r
1 1
2 1
) 1 ( ) 1 ).....( 1 )( 1 ( 1

+

= + + + + = +
K K
K
k m
C B
B
j where j j j i
*/+ loan ,alance
t
t r
t
PS i L B + = ) 1 (
(here L= loan amount, P= periodic
payment

t n
p
t
Pa B

=
Loan amorti-ation $nterest paid at time
1
1
) 1 (
+
+
= =
t n
t n
iPa v P t
Principal repaid at time
1 +
=
t n
Pv t
Amount in sin"ing 'und at j t
PS t =

$nterest earned at t= 1 t
jPS
+in"ing 'und deposit n
S P / ) amount dollar Target ( =
.ond price or .oo" Value /(here
t n
Cv K

= 0
) ( ) ( ) ( K C
i
g
K v G C G a Ci Fr C Cv Fra B
t n
t n
t n
t n
t
+ = + = + = + =

$nterest earned
1
=
t t
iB I
Amorti-ation o' premium, or accumulation o' discount
1
) (
+
= =
t n
t t
v i g C Fr I P
2