Summary of Financial Math Formulas:
Simple Interest:
= Interest Earned
= Principal/Present Value
= Annual Rate (decimal)
= Time (years)
1
Compound Interest:
If your loan/investment is compounded m times
per year:
1
If your loan/investment is compounded
continuously:
= Future Value/Maturity Value
= Principal/Present Value
= Annual Rate (decimal)
= Number of Compounding Periods per Year
= Time (years)
Effective Rate:
1
1
Use this to compute the effective rate if your
loan/investment is compounded m times per year.
Use this to compute the effective rate if your
loan/investment is compounded continuously.
1
Future Value of Ordinary Annuities & Sinking Funds:
1
1
1
1
The payment/deposit is at the END of the period.
= Future Value/Total amount accrued
= Payment/Deposit made in each period
= rate per period (usually
)
= total number of times compounded (
Annuities Due:
1
1
The payment/deposit is at the BEGINNING of the
period
Present Value of Ordinary Annuities & Amortization:
1
1
The payment is made at the END of the period.
P = Present Value
= Payment made in each period
= rate per period (usually
)
1
1
= total number of times compounded (