Summary of Financial Math Formulas

Summary of Financial Math Formulas:

Simple Interest:

1

Compound Interest: If your loan/investment is compounded m times per year:

1

If your loan/investment is compounded continuously:

= Interest Earned = Principal/Present Value = Annual Rate (decimal) = Time (years)

= Future Value/Maturity Value = Principal/Present Value = Annual Rate (decimal) = Number of Compounding Periods per Year = Time (years)

Effective Rate:

1

1

Use this to compute the effective rate if your loan/investment is compounded m times per year.

1

Use this to compute the effective rate if your loan/investment is compounded continuously.

Future Value of Ordinary Annuities & Sinking Funds:

1

1

The payment/deposit is at the END of the period.

= Future Value/Total amount accrued

= Payment/Deposit made in each period

1

1

= rate per period (usually

)

= total number of times compounded (

Annuities Due:

1

1

The payment/deposit is at the BEGINNING of the

period

Present Value of Ordinary Annuities & Amortization:

11

The payment is made at the END of the period.

P = Present Value

= Payment made in each period

11

= rate per period (usually

)

= total number of times compounded (

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