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CH 9-Formulas

accounting

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9 views2 pages

CH 9-Formulas

accounting

Uploaded by

nguyennmiaa
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd

NOTATION

FV = Future value (maturity value or accumulated i = Periodic rate of interest (interest rate per
value) of a loan or investment compounding period)

PV = Present value (discounted value or principal m = Number of compounding periods per year
amount) of a loan or investment (compounding frequency)

I = Amount of compound interest of a loan or n = Number of compounding periods during the


investment term

j = Nominal (stated or quoted) annual interest t = Time period or term in years


rate
f = Effective interest rate (annually compounding
rate)

FORMULAS

( ) –1
Future Value | 9.1(a) 1
FV n
i=
FV =PV ( 1+i )
n PV

Present Value | 9.1(b)


FV −n
PV = n
∨PV =FV ( 1+i )
( 1+i )

Amount of Compound Interest | 9.1(c)


I =FV – PV

Periodic Interest Rate | 9.1(d)


j
i=
m

Number of Compounding Periods | 9.1(e)


n=m× t

Periodic Interest Rate | 9.5(a)


Nominal Interest Rate | 9.5(b)
Equivalent Periodic Interest Rate | 9.7(a)
j=m× i
m1
m2
Number of Compounding Periods | 9.6(a) i 2=( 1+i 1 ) – 1

n=
ln
FV
PV ( ) Equivalent Nominal Interest Rate | 9.7(b)
j 2 =m2 ×i 2
ln (1+i)

Time Period in Years | 9.6(b) Effective Interest Rate | 9.7(c)


n
t=
m
m
f =( 1+i ) −1

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