Formulas - Eastern Mediterranean University
Formulas
Compound Amount: To find F, given P (F/P, i, n)
Present Worth: To find P, given F (P/F, i, n)
Series Compound Amount: To find F, given A (F/A, i, n)
Sinking Fund: To find A, given F (A/F, i, n)
Capital Recovery: To find A, given P (A/P, i, n)
Series Present Worth: To find P, given A (P/A, i, n)
Arithmetic Gradient Uniform Series: To find A, given G
(A/G, i, n)
or
Arithmetic Gradient Present Worth: To find P, given G (P/G, i, n)
Geometric Gradient: To find P, given A1, g (P/G, g, i, n) when i = g
Continuous Compounding at Nominal Rate r Single Payment:
when i / g
Uniform Series:
vii
viii Formulas
Compound Interest
i = Interest rate per interest period. n = Number of interest periods. P = A present sum of money. F = A future sum of money. A = An end-of-period cash receipt or disbursement in a uniform series continuing for n periods. G = Uniform period-by-period increase or decrease in cash receipts or disbursements. g = Uniform rate of cash flow increase or decrease from period to period; the geometric gradient. r = Nominal interest rate per interest period. m = Number of compounding subperiods per period.
Effective Interest Rates
For non-continuous compounding: ieff or ia =
where r = nominal interest rate per year m = number of compounding periods in a year
OR
ieff or ia =
where i = effective interest rate per period m = number of compounding periods in a year
For continuous compounding:
ieff or ia = where r = nominal interest rate per year
Values of Interest Factors When n Equals Infinity
Single Payment:
Uniform Payment Series:
(F/P, i, = (P/F, i, = 0
(A/F, i, = 0 (A/P, i, = i
(F/A, i, = (P/A, i, = 1
Arithmetic Gradient Series:
(A/G, i, (P/G, i,
= 1/i = 1/i2
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