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𝑫𝒆𝒑𝒓𝒆𝒄𝒊𝒂𝒕𝒊𝒐𝒏
𝑬𝒇𝒇𝒆𝒄𝒕𝒊𝒗𝒆 𝑰𝒏𝒕𝒆𝒓𝒆𝒔𝒕 𝑹𝒂𝒕𝒆 𝑺𝒕𝒓𝒂𝒊𝒈𝒉𝒕 𝑳𝒊𝒏𝒆
𝑟 𝑚 1
𝑖𝑎 = [1 + ] − 1 = (1 + 𝑖)𝑚 − 1 𝑑𝑡 = ( ) (𝐵 − 𝑆)
𝑁
𝑚
𝑁 ∗ (𝑁 + 1)
𝑊ℎ𝑒𝑟𝑒 𝑆𝑂𝑌𝐷 =
2
𝑟 𝑖𝑠 𝑛𝑜𝑚𝑖𝑛𝑎𝑙 𝑖𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝑝𝑒𝑟 𝑦𝑒𝑎𝑟
𝑚 𝑖𝑠 𝑐𝑜𝑚𝑝𝑜𝑢𝑛𝑑𝑖𝑛𝑔 𝑠𝑢𝑏 𝑝𝑒𝑟𝑖𝑜𝑑𝑠 𝑝𝑒𝑟 𝑦𝑒𝑎𝑟 𝑫𝒐𝒖𝒃𝒍𝒆 𝑫𝒆𝒄𝒍𝒊𝒏𝒊𝒏𝒈
𝑛 𝑖𝑠 𝑡ℎ𝑒 𝑛𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑦𝑒𝑎𝑟𝑠 2
𝑑𝑡 = ( ) 𝐵𝑉𝑡−1
𝑁
𝑪𝒂𝒑𝒊𝒕𝒂𝒍𝒊𝒛𝒆𝒅 𝑪𝒐𝒔𝒕
𝐴 𝑊ℎ𝑒𝑟𝑒
𝑃=
𝑖 𝐵 𝑖𝑠 𝑐𝑜𝑠𝑡 𝑜𝑓 𝑎𝑠𝑠𝑒𝑡 (𝑖𝑛𝑖𝑡𝑖𝑎𝑙 𝑐𝑜𝑠𝑡)
𝑆 𝑖𝑠 𝑠𝑎𝑙𝑣𝑎𝑔𝑒 𝑣𝑎𝑙𝑢𝑒
𝑁 𝑖𝑠 𝑑𝑒𝑝𝑒𝑐𝑖𝑎𝑏𝑙𝑒 𝑙𝑖𝑓𝑒
𝐵𝑉 𝑖𝑠 𝑏𝑜𝑜𝑘 𝑣𝑎𝑙𝑢𝑒
598 APPENDIX C: COMPOUND INTEREST TABLES