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Summary of Equations by Kaye Anna S. Reyes
Summary of Equations by Kaye Anna S. Reyes
Summary of Equations by Kaye Anna S. Reyes
Example: The borrower obtains a $1,000 loan for a year and pays $60 in interest when the loan is
repaid. In that case the rate of interest is:
iCB = $60 x 12
$1,000 12
Cash x % x 12
Cash – (Cash x %) 12
AMOUNT OF LOAN
Note: 2/10, n/30 means 2%, amount due paid 10 days and amount full due is in 30 days.
Note:
TIME VALUE OF MONEY P = Present Value
FVIF = Future value interest
FUTURE VALUE OF A DOLLAR
PVIF = Present Value
P0 x FVIF (PercentI,yearN) = Pn interest
rate (look in interest table)
I = Percentage or interest
rate)
N = number of time
THE PRESENT VALUE OF A DOLLAR
periods/ year
Pn x PVIF (I,N) = P0
DISCOUNTING: P0 = Pn
(1 + i)
Answer:
$1000 x 36.786 = $36,786
$36,786 (1+.06) = $38.9932
$1000 x 38.9932 = $38,993.20