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

Q. Show Advantages of financial intermediation? The advantages of financial intermediation are as follows Investors are able to pool their funds in a bank deposit account to

Statute of Limitations - This sets out the period within that actions may be brought upon claims or within which rights may be enforced. As it concerns to tax returns, statute of l

A company that uses the perpetual inventory system purchased $8,500 worth of inventory on September 25. Terms of the purchase were 2/10, n/30. The invoice was paid in full on Octob

You have just started work for Warren Co. as part of the controller's group involved in current financial reporting problems. Jane Henshaw, controller for Warren, is interested in

how to do the calsulations for bad debts

How do you show bond amortization on a spreadsheet and then in journal entries and compute interest payments?

SED Analysis SDE i.e. Scarce, Difficult and Easy analysis estimates the significance of inventory items on the basis of their availability. According to SDE analysis the invent

Apple Corporation has been hearing complaints from some shareholders about returning some of the $150 billion in cash that the corporation has. Some shareholders think a large divi

Static Balancing : This balancing is complete in the plane of unbalance. Dynamic Balancing : In this case two balance planes are needed because forces along couples are to