Ch 5 Cmp Int Flashcards by Unknown Unknown

Q

Compound Int Formula

A

FV = P (1 + i) ^ n

i = r/n

n = Compounding in a year OR n = n * t for the exponent

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Q

Present Value (Com Int)

A

Find P — FV = P (1 + i) ^ n ——> FV = P (1 + r/n) ^ n * t

FV / (1 + r/n) ^ n * t ====== P

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Q

Annual Yield (AY)

A

AY = (1 + i ) ^ n (compounded) - 1

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