Simple Interest

I=PRT
Where:
I=Interest
P=Principal
R=Rate
T=Time
Finding Principal
I
P= RT

Finding Rate

I
R= PT

Finding Time
I
T= PR

Find maturity
M=P+I
Where:
M=Maturity
P=Principal
I=Interest

M=P+PRT

M=P(1+RT)
Discount

Simple Compound Discount Formula

D=Mrt
Where:
D=Discount
M=Maturity Value
r=Discount rate
t=Discount time

Computing maturity when discount rate and time are

given.
D
M= rt
Computing Discount rate when discount value,
maturity, and value are given.
D
r= Mt
Computing Discount time when maturity value,
discount amount and rate are given.
D
t= Mr
Computing maturity value by process of factoring
M=P(1+RT)
Where:
M=Maturity value
P=Principal
R=Rate
T=Time

Computing Present Value of Simple Discount

 M
P= 1+ RT

The following notation will be used:

B=Bank discount
M=Maturity value
d=Discount rate
T=Time
D= Discount
W=Proceeds

Computing Bank Discount

Bank Discount =Maturity value × Discount rate
×Time
B=M× d × T

Computing Proceed
Proceed= Maturity Value ─ Bank discount
W= M – (M× d × T)

Computing Proceed by process of factoring

W= M¿)
W=M (1−RT )

Computing the desired Proceed

W
M= 1−dT

D
Effective interest rate= P×T
Compound interest
Compound Amount Formula
F= P(1+i) n

P= F(1+i) −n

j
i= m
t
n= m
where:
F= compound amount
P=present value
I=rate of interest
n=number of periods
j=nominal rate
m=frequency of conversion
t=time in years
Continuous compounding
Compound amount Formula using Continuous
Compounding
F= Pe jt

Compound Present Value Formula using Continuous

Compounding

P=Fe− jt

Varying Interest
Compound Amount Formula with Varying
Interest rate

F= P(1+i1)n1 + (1+ i2)n2 + (1+ i3)n3 ...

P= F(1+i1) -n1 + (1+ i2) -n2 + (1+ i3) –n3 ...

Finding Time
t= p )
( F
ln

Determining the Interest rate

i ¿¿
j=im

j= p )
( F
ln

Ordinary annuities

Computing ordinary annuity

C=A¿
Where:
C= compound amount or sum of annuity
A= annuity Payment
i=Periodic Interest
n= Total compounding periods

Present value of ordinary annuity

 −n
1−(1+i)
P= A i

Where:
P= Present value annuity
A= annuity payment
i= periodic interest rate
n= total compounding periods

Computing periodic payment or annuity payment

when present value is given

i
A= P( 1−( 1+i )−n )
where :

P = Present value of an annuity

A= Annuity payment

i= periodic Interest rate

n= Total Compounding periods

Computing periodic payment or annuity payment when mature value or future amount is
given

A= C ( i
)
1−( 1+ i ) −n
where:

C= Compounding amount or sum of an annuity

A= annuity payment
i= periodic interest rate
n= total compounding periods
 Finding final payment when present value is given

1−(1+i)−n
P= A + X (1+i)– n−1
i

P= present value

A= annuity payment

i= periodic rate

n= Number of conversion Period

x= final last payment

Finding final payment when maturity value or future

amount is given.
−n
C¿ A 1−(1+i ) + X
i

A= annuity payment

i= periodic rate

n= Number of conversion Period

x= final last payment

C= Compound amount or sum of annuity

Finding the interest / nominal rate

Factor=( present value )

annuity payment

Finding the interest of an ordinary annuity when the present value is given
 i=−6 ( n+1 )+ √¿ ¿ ¿
where:

A= annuity payment
i= periodic interest rate
n= total compounding periods
P= Present value of an amount

Finding the interest of an ordinary annuity when future or annuity value is given

i=6 ( n+ 1 )−√ ¿ ¿ ¿

where:

A= annuity payment
i= periodic interest rate
n= total compounding periods
C= Future value or Compound amount

Annuity due

Computing the amount of annuity due

C ( ( 1+ i )n −1 )
¿A (1+ i)
i
where:

A= annuity payment
i= periodic interest rate
n= total compounding periods
C= Compound amount sum of an annuity

Present value of an annuity due

P¿ A ¿ ¿

where:

A= annuity payment
i= periodic interest rate
n= total compounding periods
P= Present value of an annuity due

Finding the periodic payment of an annuity Due when the present value of the
annuity is given.

1 −1
A= P 1−(1+ i)−n (1+i)
i

A= P i
−n
¿
(1−(1+ i) )(1+i)

where:

P= Present value of an annuity

A= annuity or periodic payment

i= periodic interest rate
n= total compounding periods
Finding the periodic payment of an annuity due when the compound amount
or future value is given.

1 −1
A= C (1+i)n +1 (1+i)
i

A= C i
n
( 1+i)¿¿
(1+i) −1 ¿

where:

C= compound amount or future value of an annuity

A= annuity or periodic payment

i= periodic interest rate
n= total compounding periods

Finding the rate of an annuity

value factor = ( present value−annuity Payment )

Annuity payment

Deferred Annuity

finding the amount or future value of the deferred

annuity

C ( ( 1+ i)n −1 )
¿A
i
where:

A= annuity payment

i= periodic interest rate

n= total compounding periods

C= Compound amount or future value of

the deferred annuity

present value of the deferred annuity

( 1− ( 1+i )−s ) ( 1−( 1+i )−m )
P= A −
i i

Where:
P= present value of the deferred annuity
A= annuity or periodic payment
i= periodic interest rate
n= total payment periods
m= Period of deferment
s= sum of (n+m)
Finding periodic payment

1 −m
A= P 1−(1+ i)−n (1+i )
i

Where:
P= present value of the deferred annuity
A= annuity (periodic) payment
i= periodic interest rate
n= total compounding periods
m=Period of deferment

finding the term of a deferred annuity

P
value factor = A
(1+i )−m

Where:
P= present value of the deferred annuity
A= annuity (periodic) payment
i= periodic interest rate
n= total compounding periods
m=Period of deferment

perpetuity annuity

simple ordinary perpetuity

A
P= i
Where:
P= Present value of simple ordinary perpetuity
A= perpetuity periodic payment
i= periodic interest rate

Present value of simple Perpetuity due

A
P¿ i + A
Where:
P= Present value of simple ordinary perpetuity
A= perpetuity periodic payment
i= periodic interest rate

present value of simple deferred perpetuity

( 1−( 1+i )
−m
)
P A
¿ −A
i i

Where:
P= Present value of simple deferred perpetuity
A= Deferred perpetuity periodic payment
i= periodic interest rate
m=Period of deferment
Periodic payment of simple ordinary perpetuity
A¿ Pi
Where:
A= perpetuity periodic payment
P= Present value of simple ordinary perpetuity
i= periodic interest rate

Periodic payment of perpetuity due

Pi
A ¿ 1+i

Where:
A= perpetuity periodic payment
P= Present value of simple perpetuity due
i= periodic interest rate

Periodic payment of deferred Perpetuity due

A¿ Pi(1+i)m

Where:
P= Present value of simple deferred perpetuity
A= Deferred perpetuity periodic payment
i= periodic interest rate
m=Period of deferment
General Annuity
General Ordinary Annuity

Finding the Present Value of the General Ordinary Annuity

A ( 1−( 1+i ) −n
)
P= ×
y
(1+i) −1 i
i

If the number of payment intervals (y) is a fraction the formula is :

A ( 1−( 1+i ) −n
)
P= ×
1/ y
(1+i) −1 i
i

Where:
P= present value of the general annuity
A= General ordinary annuity payment
I= Periodic Interest rate
n= Total number of interest period
y= number of payment intervals for the interest period

Finding the future value of the general annuity

A ( ( 1+i )n−1 )
C= ×
(1+ i) y −1 i
i

When y is a fraction

A ( ( 1+i ) −1 )
n

C= ×
1/ y
(1+ i) −1 i
i

C= future value of general Annuity

A= General ordinary annuity payment
I= Periodic Interest rate
n= Total number of interest period
y= number of payment intervals for the interest period

finding the Periodic payment of general ordinary Annuity when the

present value is given

A
P=
¿¿¿¿
Where:
P= present value of the general annuity
A= General ordinary annuity payment
I= Periodic Interest rate
n= Total number of interest period
y= number of payment intervals for the interest period

Finding the present value of the general Annuity due

A ( 1−( 1+i ) −n
)
P= ×
1−( 1+i )
−y
i
i

If y is a fraction
A ( 1−( 1+i ) −n
)
P= ×
1−( 1+i )
−1/ y
i
i

Where:
P= present value of the general annuity
A= General ordinary annuity payment
I= Periodic Interest rate
n= Total number of interest period
y= number of payment intervals for the interest period

finding the future value of the general annuity

A ( (1+i ) −1 )
n

C= ×
1− (1+i )
−y
i
i
If y is a fraction
A ( (1+i ) −1 )
n

C= ×
1− (1+i )−1 / y i
i

Where:
P= present value of the general annuity
A= General ordinary annuity payment
I= Periodic Interest rate
n= Total number of interest period
y= number of payment intervals for the interest period
finding the Periodic payment of general Annuity due when the present
value is given

A
P=
¿¿¿¿
Where:
P= present value of the general annuity
A= General ordinary annuity payment
I= Periodic Interest rate
n= Total number of interest period
y= number of payment intervals for the interest period

SINKING FUNDS

find the size of the Periodic Deposit

for ordinary annuity

A= C i
(1+i)n−1

for annuity due

1
A=
C n−1
(1+i)−1
(1+i)
i
A= C i
n
¿
( ( 1+i ) −1)(1+i)

Where :
C = Compound amount or future value of an annuity
A = Annuity or periodic payments
i = Periodic interest rate
n = Total compounding periods

finding the amount after a certain periodic deposit

for ordinary annuity

( ( 1+i )t−1 )
C r= A
i
for annuity due

( (1+i )t −1 )
C r= A (1+ i)
i

Where:
C= amount after the deposit
A= Periodic deposit
i= periodic Interest rate
r= number of periodic deposits made

computing for the book value of debt

BV.D = C – Cr
where:

BV.D = Book value of Debt

C = Desired amount to raise

Cr = Amount of fund after rth deposit

finding the increase in funds after certain deposit

for Ordinary annuity

 ( 1−( 1+i )−1 )
¿ F =A (1+i)
i
for annuity due

( 1−( 1+i )−1 )

¿ F =A (1+i)(1+i)
i

Finding the interest on certain period deposit

For ordinary annuity

Ir = A ¿ ¿
for annuity due

( 1−( 1+i )−1 )

Ir¿ A ( 1+i )( 1+i ) i
−A

Amortization
Finding the size of each Payment
For ordinary annuity
i
A= P −n
1−(1+i)

For annuity due

1
P (1+i)−1 i
A=
1−(1+ i)
−n
Or A= P −n
¿
(1−( 1+i ) )(1+ i)
i

For deferred annuity

1 m
P (1+i) i(1+i)
m
A=
1−(1+ i)
−n
Or = P
1−(1+i)−n
i

For general ordinary annuity

P
A=
¿¿¿¿
For general annuity Due
P
A¿ ¿ ¿¿ ¿

Where:
P= present value of the general annuity
A=Size of periodic payment
I= Periodic Interest rate
n= Total compounding period
m= Period of deferment
y= number of payment intervals for the interest period

computing outstanding Principal after rth payment

( 1−( 1+i )−(n−r ) )
Pr =A
i

For annuity due:

( 1−( 1+i )−(n−r ) )
Pr =A (1+ i)
i

For deferred annuity

( 1−( 1+i )−(n−r ) )
Pr =A m
i ( 1+i )

Where
Pr = Present value of periodic payment to be made or the outstanding
Principal
A = Periodic Payment
n= Toal number of Compounding Period
r= Total number of Period paid
i= Periodic rate of interest
m= Period of Deferment

Finding The number of Regular Payment

n=
(
log 1−
iP
A)
−log ⁡(1+i)

Where:
n= Number of Periods where regular payment are made
i= Periodic interest rate
P= Present value of obligation
A= Periodic payment
Finding the term of an ordinary annuity when present value is given
log A−log ( A−Pi )
T=
f log ⁡(1+i)

Where:
T= Term of ordinary annuity
P= Present Value of an annuity
A= Annuity Payment
i= Periodic interest rate
f= Frequency of conversion

finding the outstanding liability

r ( ( 1+i )r−1 )
O L=P ( 1+i ) − A
i
where:

OL= Outstanding Liability

P= Present Value of Loan
r= Number of Past payments
i= Periodic interest rate
A= periodic Payment

Computing the amount of final Payment

n+1 ( ( 1+i )n−1 )
F A=P ( 1+i ) − A ( 1+i )
i

Where:
FA= Amount of Final Payment
P = Present Value of Debt
i= Periodic interest rate
n= Number of periods with regular payment
A= regular periodic payment
Depreciation

Computing Depreciation

( C−S v )
DA=
n

Where :

DA = Annual Depreciation
C= Cost
SV = Scrap value
n= Estimated useful Life

Computing Annual Depreciation

DA= DC × DR

where:

DA = Annual Depreciation

DC = Depreciable cost
DR= Depreciation rate under straight line method
Computing Depreciation rate per units

( C−Sv )
D R/ U =
E UP

where:

D R/ U =¿ Depreciation rate per unit

C = Cost
SV = Scrap Value
EUP = Estimated unit of Production

n+1
SYD = n 2

Where:
SYD = Sum of years’ Digit
n= Estimated useful life

Computing Periodic Deposit

1
−1
A= D C 1−(1+i)
−n

where:

A = Periodic Deposit to the Fund

DC = Depreciable Cost
i= Interest rate