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Page: Khem Sarith Education

Prepared by Khem Sarith 8/29/2016 1
. (Interest)



(
)
(
)

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-




-

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. (Interest Rate)

Total Interest Paid
r
Principle Amount

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?

150
r 0.15 or 15%
1000

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10 % 0.10

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8/29/2016
.

Type of Interests

Simple Interest Compound Interest

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.

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.

I = PV. t.r
I
PV
t.r
I
r
PV.t

I
t
PV.r

I
PV

r
t

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$ 200,000,000

24 %

/ , / , / , /

I 200,000,000 3 0.24 $144,000,000

/

7
I 200,000,000 0.24 $ 28,000,000
12
Prepared by Khem Sarith 8/29/2016 10
/

40
I $200,000,0 00 0.24 $ 5,333,333. 33
360
/

7 40
I $200,000,000 0.24 2
12 360
$48,000,000 2 0.5833 0.1111
$48,000,000 2.6944
$129,333,333.33

Prepared by Khem Sarith 8/29/2016 11

.

(Future value and Present value)

PV

r

t

FV = PV.(1 + t.r)

FV
PV
1 t .r

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$ 210,000,000
24 %
42

t
FV PV 1 .r
12
42
FV42 Month 210,000,000(1 0.24)
12
$ 386,400,000

$386,400,000

Prepared by Khem Sarith 8/29/2016 13

.

FV = PV(1 + r)t


PV
FV
1 r t
r
t
PV


FV

Prepared by Khem Sarith 8/29/2016 14

$ 15,000,000

4 12 %

PV = $15,000,000 ; r = 0.12 ; t = 4
FV = PV(1 + r)t = 15,000,000(1+0.12)4
= 15,000,000(1.12)4 = $ 23,602,790.40

$ 23,602,790.40

Prepared by Khem Sarith 8/29/2016 15

.
(Continuous compounding interest)

m


r/m

mt
r
FV PV 1
m

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 m

r .t
m
r
1
m.t
r
FV PV lim 1 PV lim 1 PV .e r .t
m m m m

r


1
mlim 1 e e = 2.7182

FV PV .e r.t

Prepared by Khem Sarith 8/29/2016 17


$ 1,000

8 %
25

25

FV PV .e r .t 1000.2.7182
0.0825
$ 7388.6110

$ 7,388.6110

Prepared by Khem Sarith 8/29/2016 18



2t
r
FVSemiannual PV 1
2




4t
r
FVTerm PV 1
4

12 t
r
FVMonth PV 1
12

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.
(Compounding Interest Daily)

n
r
FV PV 1
365

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$ 1,000

15 %

28

n
r
FV PV 1
365
28
0.15
$1,0001
365
$1,000 1.0115 $1,011.50

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..
Determination of Market Interest Rate

(Interest
Rate on Loan
able Fund)

(Supply Credit)

(The Demand of Credit)

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Prepared by Khem Sarith 8/29/2016 23
.. (Measuring Interest Rate)



1.
(Simple Loan)








(Fixed Payment Loan)
2.

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3. (Coupon Bond)







4. (Discount Bond)

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..
(Present Value)



$1


$1



$1



$1

$10
$100

r =$10/$100 = 0.10 10%

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$100(1+0.10)=$110


$110(1+0.10)=$121
$100(1+0.10)2 =$121


$121(1+0.10)=$133
$100(1+0.10)3=$133



r
0.10 10%



t

$100(1+0.10)t

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$100



$110

10%
$110



$100




$121


$133


$100

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$133
10%

$100 = $100(1+0.10)3=$133

$133
$100

1 r t





( PV)
$1 t
r
PV $1
$1

1 r t
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..

Yield to Maturity



FP
C
YTM n
FP
2
F


P

n

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$1,000

$900
10

6%

1,000 900
60
YTM 10 7.36%
1,000 900
2

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PE = I R R = I PE I = R +PE

I

R

PE

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