FM-financial mathematic formula sheet, Cheat Sheet of Financial Accounting

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Module 3 - Interest Rates and the Time Value of Money Page Mi- 47 Section 1.14 Formula Sheet a(t): accumulated value at time i of an initial investment of 1 made at time 0 A(t): accumulated value at time ft of an initial investment of A(G) made at time 0 For simple interest at a constant rate i: a(t) =14t-i AQ) = A()-(1+t-i) For compound interest at a constant rate i: at) =(1+ pt = eh man) A(t) = A)(1+ a = A(Bera-e FV =PV(i+i)" —— d=i-v vei-d isi i . a d= d=t ao, i-d=id Ti ” Tra ae S=In(l+i) e =hti att)=e" G+" =e” pt =(1+i)" =e" For a variable force of interest: 6®= oe ai)= lesen Equivalent Rates: jon) \™ (mj \* )\? tvi-(1452) [2] --@| m m p Note the negative exponent, -p. : 6 = lim (i) =lim(a') di) Quoted Rates for Treasury bills: US. T-bills: Quoted Rate = 360 Amount of Interest Days to Maturity * Maturity Value 365 Amount of Interest Canadian T-bills: Quoted Rate = ————___ x ——-" Days to Maturity Current Price Rule of 72; At an effective interest rate of x% per period, an investment will double in about 72/ x periods. ‘ACTEX Learning oo “Exam FM - Financial Mathematics Dinius, Hassett, Ratliff, Garcia, & Steeby