SIMPLE, COMPOUND AND CONTINUOUSLY COMPOUNDING INTERESTS Flashcards
F = Pe^((i^m)(t))
Continuous Compounding
i^m / m = ___
j (rate of interest for each conversion period)
total # of conversion periods
n
of conversion periods in a year
m
unit of time (in years)
t
P = F / (1 + j) ^ n
Compounding more than once a year
F = P (1 + j) ^ n
Compounding more than once a year
n = __
mt
interest that remains constant
simple interest (I_s)
interest wherein past interests gain interest
compound interest (I_c)
rate when compounded annually will give same compound each year with nominal rate
effective rate
annual interest rate
nominal rate
i^m
nominal rate
i^1
effective rate
(P)(r)(t) = ___
I_s
F = P ( 1 + rt )
Simple Interest
P = I_s / rt
Simple Interest
F - P = ____
I_c
F = P(1+r)^t
Compound Interest
P = F(1+r)^-t
Compound Interest
(1 + r/m)^m - 1 = ____________
i^1 (Effective Rate)
