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TVM Formulas PDF
TVM Formulas PDF
Simple interest
Total interest:
I = CV · r · n
Rate of interest:
I
r=
CV · n
Term of maturity:
I
n=
CV · r
Current value:
I
CV =
r ·n
Future value:
FV = CV(1 + rn)
FV/CV − 1
r=
n
FV/CV − 1
n=
r
132
LIST OF FORMULAS 133
Ordinary interest:
1
I0 = I e 1+
72
or I0 = 1.014Ie
Exact interest:
1
Ie = I 0 1+
73
I0
or Ie =
1.014
Equivalent time:
Pi ni
n=
Pi
E − [(B + D) − W ]
r=
Bt + D(t − t1 ) − W (t − t2 )
Bank discount
Discounted proceeds:
C = FV(1 − dn)
C = FV − D
Future value:
C
FV =
1 − dn
Discounting term:
1 − (C/FV)
n=
d
Discounting rate:
1 − (C/FV)
d=
n
134 LIST OF FORMULAS
Interest rate:
d
r=
1 − dn
Discount rate in terms of interest rate:
r
d=
1 + rn
Discount rate in terms of a bid:
360 − 3.6B
d=
n
Compound interest
Future value:
FV = CV(1 + r)n
Current value:
FV
CV =
(1 + r)n
Discount factor:
1
DF =
(1 + r)n
Interest rate:
n FV
r= −1
CV
Term of maturity:
ln(FV/CV)
n=
ln(1 + r)
FV = CV · ern
LIST OF FORMULAS 135
CV = FV · e−rn
Rule of 72:
72
n=
r
Rule of 114:
114
n=
r
Rule of 167:
167
n=
r
Annuities
Future value of an ordinary annuity:
A[(1 + r)n − 1]
FV =
r
FV = A · Sn r
A[1 − (1 + r)−n ]
CV =
r
CV = A · an r
FV · r
A=
(1 + r)n − 1]
1
A = FV ·
Sn r
1
A = FV −r
an r
136 LIST OF FORMULAS
CV · r
A=
1 − (1 + r)−n
1
A = CV ·
an r
FV · r
Ad =
(1 + r)n+1 − (1 + r)
CV · r
Ad =
(1 + r) − (1 + r)1−n
FVdef = A · Sn r
CVdef = A · an r (1 + r)−d
Perpetuity:
A = r · CV∞
Rate of a perpetuity:
A
r=
CV∞
A
CV∞ =
r