Interest rate calculations, Other Engineering

Interest Rate Calculations

In considering the time value of money, it is convenient to represent mathematically the relationship between the current or present value of a single sum, which we will represent as P, and its future value (F) in n years.

F = P + In

where In is the increase in the value of P over n years, which is a function of an annual interest rate (i).
The are two approaches for computing In. The first approach known as simple interest rate considers In to be a linear function of time, which is given by,

In = Pin
and
Fn = P(1 + in)

The second approach known as compound interest rate, considers that at the end of each interest period the accumulated amount of money is now the amount of principal at the end previous period plus the interest accumulated over that period P(l + i); therefore, for the subsequent period the accumulated amount of money will be P(P + i)i. Now, using the same procedure we can fill Table 2.1 for the subsequent periods.

Table Derivation of equation 1

1732_Intrest for next period.png

Thus, we can derive the formula for the future amount F, in terms of P, i, and n given by,

F =P(l+i)n

Posted Date: 3/15/2013 5:32:29 AM | Location : United States







Related Discussions:- Interest rate calculations, Assignment Help, Ask Question on Interest rate calculations, Get Answer, Expert's Help, Interest rate calculations Discussions

Write discussion on Interest rate calculations
Your posts are moderated
Related Questions
if you have a sample of lap pulp that is at 9% moisture how much of it do you need to be weighed to be put into a valley beater

How do I finish a tough Engineering assignment in excel?

What is Networth? Networth is the complete resources without complete obligations of an organization. Networth means equity and it is the present resources without present oblig

Can you describe an example of a conceptual model?

Mechanical pulverization method is applicable to brittle metals like antimony. Many varieties of mechanical pulverizers are in use; some of these have counter rotating plates or r

Sulphuric acid can be made with concentration of 99%. However for different industrial process different concentrations are used. For a specific industrial requirement, 62% H2SO4

from suction side oil comes out

i have created simulink model for rs code with overlapped symbol and without overlapped symbol. and BIT ERROR RATE VERSUS EB/NO PLOT is observed for its performance analysis.but i

Assume that a movie is two hours long, that the frame rate is 30 frames per second, and that the resolution per frame is 1080i (1920×1080 pixels per frame), and that each pixel is

compare zero- one- two- and three-address machines by writing programs to compute X=(A+B*C)/(D-E*F)