The Difference is Negligible

The Difference is Negligible - The Difference is Negligible...

Info iconThis preview shows pages 1–4. Sign up to view the full content.

View Full Document Right Arrow Icon
The Difference is Negligible 1 k = annual rate i = daily periodic rate n = number of days FV FV 1 + ( kn ) [1 + k ] n FV FV 1 + (n х k/ 365 ) [1 + k / 365 ] n PV = $200,000 PV = $200,000 1 + (30 х 0.10 / 365 ) [1 + 0.10 / 365 ] 30 PV = $198,369.57 PV = $198,363.12 Simple Interest PV = Compound Interest PV = PV = PV =
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Two Ways to Compute S/I 2 If the annual rate ( k ) has already been converted to a periodic rate ( i ), the number of periods ( n ) can be substituted directly. BE CAREFUL WITH ROUNDING!! FV FV 1 + ( kn ) 1 + ( i х n ) FV 1 + (n х k/ 365 ) PV = $200,000 PV = $200,000 1 + (30 х 0.10 / 365 ) 1 + (30 х 0.00027397 ) PV = $198,369.57 PV = $198,369.56 Simple Interest w/ ANNUAL Rate PV = Simple Interest w/ DAILY Rate PV = PV = k = annual rate i = daily periodic rate n = number of days
Background image of page 2
3 If this formula is true for a single cash flow: This is the expanded formula for a series of cash flows: k = annual rate i = daily periodic rate n = number of
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 4
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 10

The Difference is Negligible - The Difference is Negligible...

This preview shows document pages 1 - 4. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online