Time Value of Money
, Introduction
• Meaning
• Simple interest vs. compound interest rate.
• Seven interest formulas.
, Important notations for the interest formulas unit
• P=Principal amount/present worth
amount/present value amount
• F=Maturity amount/future worth amount/future
value amount
• i=Interest rate/Rate of interest (Compound
interest rate)
• A= Annual equivalent amount/Equal cash flow in
each interest period
• n= Number of interest periods (It may be in
terms years, months, quarters, weeks etc.)
, Introduction
• Meaning
• Simple interest vs. compound interest rate.
• Seven interest formulas.
, Important notations for the interest formulas unit
• P=Principal amount/present worth
amount/present value amount
• F=Maturity amount/future worth amount/future
value amount
• i=Interest rate/Rate of interest (Compound
interest rate)
• A= Annual equivalent amount/Equal cash flow in
each interest period
• n= Number of interest periods (It may be in
terms years, months, quarters, weeks etc.)
