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  • Math01 - CO 4

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    Jae Bert Ubisoft
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    The document defines important terms related to cash flow diagrams, formulas for calculating amounts of money after and before periods with interest, sinking funds which set aside equal amounts each period at compound interest to save for future obligations, and amortization which is paying off a financial obligation through either a prospective method where outstanding principal equals present value or a retrospective method where outstanding principal equals the previous payment.

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    Math01_CO 4

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    The document defines important terms related to cash flow diagrams, formulas for calculating amounts of money after and before periods with interest, sinking funds which set aside equal amounts each period at compound interest to save for future obligations, and amortization which is paying off a financial obligation through either a prospective method where outstanding principal equals present value or a retrospective method where outstanding principal equals the previous payment.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
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    22 views4 pages

    Math01 - CO 4

    Uploaded by

    Jae Bert Ubisoft
    The document defines important terms related to cash flow diagrams, formulas for calculating amounts of money after and before periods with interest, sinking funds which set aside equal amounts each period at compound interest to save for future obligations, and amortization which is paying off a financial obligation through either a prospective method where outstanding principal equals present value or a retrospective method where outstanding principal equals the previous payment.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
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    of 4

    GENERAL MATHEMATICS

    Important Terms:

    Cash-flow diagram – graphical representation of cash flows drawn on a time scale

    Upward arrow – positive cash flow (inflow)

    Downward arrow – negative cash flow (outflow)

    Broken line arrows – total amount of money accrued from multiple deposits

    FORMULAS
    Amount of money after n periods Amount of money before n periods
    F=P(1+i)n P=F ( 1+i )−n
    Important Terms:

    Sinking funds – set aside equal amounts of money at the end of each period at compound interest for
    the purpose of saving for a future obligation.

    Amortization – process of paying off a financial obligation

    Prospective Method – “OP” is = to PV

    Retrospective Method – “OP” is = previous payment

    “two methods are equivalent however, sometimes one is more convenient than the other.”

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