Shorter compounding period, Financial Accounting

Assignment Help:

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.


Related Discussions:- Shorter compounding period

Inventory of raw material, 1) Inventory of raw material are held to make su...

1) Inventory of raw material are held to make sure that the production process is not disrupted because of shortage of raw material. The amount of raw material inventory would base

Uncertainty of cash flows, Individuals commonly prefer possession of cash i...

Individuals commonly prefer possession of cash immediately or in the present moment quite than the same amount at any time in the future. Such time preference is fundamentally due

Illustration-statement of changes in net assets-pension fund, Illustration-...

Illustration-statement of Changes in Net Assets-pension fund (a) What meetings of creditors must be held and for what purpose in the course of a creditors’ voluntary winding up

Prepare the journal entry in proper format, A company declared a $.50per sh...

A company declared a $.50per share cash dividend on December 1,2013. The Company has 20,000 shares authorized, 9,000 shares issued, and 8,000 shares of common stock outstanding. Pr

Economic substance, economic substance as in recognition of revenue

economic substance as in recognition of revenue

Evaluate price earnings ratio, Q. Evaluate Price Earnings Ratio? The P/...

Q. Evaluate Price Earnings Ratio? The P/E ratio is in general regarded as an important ratio for equity investors. The P/E for a company may be utilizing as a basis for compari

Income statement, how should i treat items in the additional information

how should i treat items in the additional information

Prepare financial statements for non reporting entities, THDS Brewery is pr...

THDS Brewery is priavet limited company(plc) established according to the Ethiopian commercial code.it is engaged in brewery business

Illustration of corporate tax-income tax-financial statement, Illustration ...

Illustration of Corporate tax During the year ended31/12/2003, A Ltd. had estimated the corporation tax for the year to be £100,000. The amount was still outstanding as at 31/1

Bankruptcy accounts for individuals and partnerships, BANKRUPTCY ACCOUNTS F...

BANKRUPTCY ACCOUNTS FOR INDIVIDUALS AND PARTNERSHIPS These include a statement of affairs and deficiency account. A statement of affairs takes the following form: v\:*

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd