nanc
Grad 12 Note
Grade 11 Notes Revision
Interest earned = Future value - payments made
Timelines
E ective interest
Nominal interest
Annuities
The number (n) of equal payments (x) made at regular time intervals
(m) subject to an interest rate (im)
The future value of annuity is the accumulated value of the stream of
payments at some time in the future eg; a retirement fund
The present value of annuity represents the value of all payments
right now eg; the lumpsum that would earn interest
, Future Value
● F - future value amount
● X - regular instalments are arrears (payment at the end of every month)
● i - e ective rate period
● n - number of payments
If ‘i’ disagree (not the same) then you need to change the compounding
(1+ im/m)m = (1 + ik/k)k
Future Value in Advance
● Keywords such as begging for immediate payments
Grad 12 Note
Grade 11 Notes Revision
Interest earned = Future value - payments made
Timelines
E ective interest
Nominal interest
Annuities
The number (n) of equal payments (x) made at regular time intervals
(m) subject to an interest rate (im)
The future value of annuity is the accumulated value of the stream of
payments at some time in the future eg; a retirement fund
The present value of annuity represents the value of all payments
right now eg; the lumpsum that would earn interest
, Future Value
● F - future value amount
● X - regular instalments are arrears (payment at the end of every month)
● i - e ective rate period
● n - number of payments
If ‘i’ disagree (not the same) then you need to change the compounding
(1+ im/m)m = (1 + ik/k)k
Future Value in Advance
● Keywords such as begging for immediate payments
