BUSANA1 Quiz 1 Formulas Bank Discount Note

October 31, 2008

Simple Interest
Sixty (60) days after the above date, the
I=Prt undersigned promises to pay XYZ Bank for
Maturity Value of Simple Interest the use of ten thousand two hundred pesos
(P 10,200) at a 10% discount rate.
F=P+I - Ronnie del Rosario
F = P ( 1 + rt)
Drawer: Ronnie del Rosario
Exact Interest Drawee: XYZ Bank
te = number of days Term of discount: 60 days
365 Maturity date: December 31, 2008
Face Value: P10,200 (also maturity value)
Ordinary Interest
Discount Rate: 10%
to = number of days Frequency of Conversion of the
360 Number of Conversion Periods
Actual Time
n=tm
Compute for the actual number of days in
Interest rate per period i
the calendar
i = j /m
Approximate Time
Assume all months consist of 30 days Where:
Simple Discount j = nominal rate
m = frequency of conversion
Id = F d t
Compound Interest
Proceeds (net of discount) Ic = F - P
Pr = F - Id Approximate Time

Pr = F ( 1 – dt ) Assume all months consist of 30 days

Compund Amount after n periods
Promissory Note
May 28, 2008 F = P (1 + i) n
30 days after, I promise to pay ABC Nominal Rate
Lending Corporation the sum of four
thousand three hundred pesos (P 4,300) I = ( F / P ) 1/n- 1
plus a 12% interest per anum.
- Mary Anne Raymundo Nominal Rate

Drawer: Mary Anne Raymundo

I = [ (F/P) 1 / n - 1] m
Drawee: ABC Lending Company Finding the Time
Term of loan: 30 days
Face value: P 4,300 n = log ( F / P )
Interest Rate: 12%
log ( 1 + I )
好好學習 天天向上 Finding the Time
n = log ( F / P ) (1 + j1/m1)n1 = (1 + j1/m2)n2
Comparing Nominal and Effective
m log ( 1 + I ) Rates
F1 = F2
Comparing Nominal and Effective (1 + j1/m1)m1 = (1 + j1/m2)m2
Rates
Comparison of Two Nominal Rates
(if the present value or principal is invested
to derive j1
at an effective rate)
j1 = m1 [(1+ j2/m2)m2/m1 - 1]
Fe = P ( 1 – w)
Comparing Nominal and Effective to derive j2
Rates j1 = m1 [(1+ j2/m2)m1/m2 - 1]
(if the principal p is invested at a nominal
rate j, compounded m times yearly)
Fn = P ( 1 + j / m) n
Comparing Nominal and Effective © 2014, The Tols Network
Rates
(if the present value or principal is invested
at an effective rate, and t is one year,
making n=m)
Fn = P ( 1 + j / m) m
Comparing Nominal and Effective
Rates
(solving the w equivalent to j)
w = ( 1 + j / m) m - 1
Comparing Nominal and Effective
Rates
(solving the w equivalent to j)
j = m [ (1 + w) 1 / m – 1 ]
Comparing Nominal and Effective
Rates
(solving the w equivalent to j)
w = ( 1 + j / m) m - 1
Comparing Nominal and Effective
Rates
(solving the w equivalent to j)
j = m [ (1 + w) 1 / m – 1 ]
Comparison of Two Nominal Rates
F1 = F2