Shorter compounding period, Financial Accounting

In our discussion so far, we have supposed that the compounding is done yearly, here let us see the case where compounding is complete more often.  In such case the equation (1) is modified to factor into the change of compounding frequency.

FVn = PV (1 + K/M) m*n

Here    FVn   = Future value after n years

PV = Present Value

K     = nominal annual rate of interest

m    = Frequency of compounding complete during a year

n     = number of years for that compounding is done.

 Whether the interest is payable semiannually frequency of compounding is 2, if this is payable monthly frequency is 12, if it is payable weekly frequency is 52 and so on.

Posted Date: 4/9/2013 2:26:42 AM | Location : United States







Related Discussions:- Shorter compounding period, Assignment Help, Ask Question on Shorter compounding period, Get Answer, Expert's Help, Shorter compounding period Discussions

Write discussion on Shorter compounding period
Your posts are moderated
Related Questions
PROTECTIVE TRUSTS The income of property may be settled on such terms as to restrict its availability to creditors of the beneficiary in the following ways: (a) Determinable

How to calculate fair value of long-lived asset when the information about fair value is not available?

Normal 0 false false false EN-US X-NONE X-NONE MicrosoftInternetExplorer4

Tool Belt Store (TBS) is expanding its chain of hardware stores across the country. TBS has more than 5,000 full-time employees and more than 20,000 part-time employees. TBS recent

The following information is available about the capital structure of Cheng & Davis Development (CDD). Capital Structure Current Target

Greek Debt Exchange On the evening of February 20, 2012 private institutional investors, representatives of the IMF, ECB, and European governments agreed to a major "intervention"

Variation of securities It would seem logical to carry out a strict apportionment between income and capital every time investments are bought or sold. If this were done, it wo

Fund Accounting - Method of ACCOUNTING and presentation whereby LIABILITIES and ASSETS are grouped according to the purpose for that they are to be used. Normally used by governmen

How do I prepare a partial income statement under each inventory method?

On June 30, 2011, Omara Co. had outstanding 8%, $3,000,000 face amount, 15-year bonds maturing on June 30, 2021. Interest is payable on June 30 and December 31. The unamortized bal