MAC2602 Formulae

HMS 1
FORMULA SHEET – MAC2602
QUESTION 1 - TIME VALUE OF MONEY (TVM)

1. SIMPLE INTERST: I=PxRxT → I = simple interest, P = principal, R = interest rate and T = time



2. COMPOUND INTERST: I = P(1+i) → I = compound interest, P = principal and i = interest rate


3. FUTURE VALUE (SINGLE PAYMENT – 1 PERIOD): FV = PV(1 + i) → FV = future value, PV = present value, i = interest rat


n
4. FUTURE VALUE (SINGLE PAYMENT – MULTIPLE PERIODS): FV = PV(1 + i) → FV = future value, PV = present
value, i = interest rate and n = Number of years/periods




5. FUTURE VALUE (ORDINARY ANNUITY): → I = Annuity amount or payment, i = Interest rate, n =
Number of years or periods
11. PERIODIC RATE:




6. FUTURE VALUE (ANNUITY DUE):

12. EFFECTIVE INTEREST RATE



7. PRESENT VALUE (SINGLE PAYMENT):


13. NOMINAL RATE



8. PRESENT VALUE (ORDINARY ANNUITY):

14. INTERPOLATION




9. PRESENT VALUE (PERPETUITY):
15. EXTRAPOLATION




10. PRESENT VALUE (ANNUITY DUE):
16. PERIODIC PAYMENT (PMT)