Financial laws with one variable
bB
fl H and
4ft are fin factors It 201
fat is accumulation factor UH I ftzo
WH is discountfactor fat
it at if it o.it
fat a o l
flt
Accumulation financialLAW
fl
If depends only on
St o rt
4ft e if s o.ie yfH e
Discountfinancial LAW
14dependsonlyon t1
Basic formulato get M M C
fat
3asic formula to get A A S 4ft
waysto
There are different calculate had
A Simple interest
Simple Accumulation In
Simplefrational discount A
Compoundaccumulation M
B Compound interest
Co.ampound discount A
Advanced simple accumulation m
C Advanced Simple interest
Bartylinear discount A
Simple Interest
Simple accumulation
o t
l l s M C get and I M C
C M
r I I 4
,ASSOMPTION
I is a function of Cfprincipal tfLifetime and i parameter definedby
I C t i i o
Since M CTI and I C t i Mi Ct C t e
M Ch te't
FRI
SIMPLEACCUMULATION
FACTOR
of
Properties
fft
It it is affine function of t
fft a
f f is increasing and
f is as 1 a
i ri
and
fftt ltifrltizt.pt
fettzo fb I
o t
o t
I
KI I 7 C 1000
C M i o 07
if f 2 M eooo f l t 0.0702 tooo 1.14 1140 E
Ie M C 1140 1000 140 E
M C fit it
C Me or C Mfititt
it it
i TIE Y
t.it E 1
SimpleNational Discount
, o t
l l s A C YIH D S A
A S
ASSUMPTION
fft 441 1 httso
I te't t i
ASSUMPTION
fat so o
fl 414 1
target find yet yftl.it t Simplediscount factor
fetleitit
A S
fat
Properties of 441
It t so and 4101 1
His decreasing w.r.tt
Y so as 1 to
ft
i 44 1 presentvalue of E1 available on
O f t
O 2
KI l l s f tooo f 2 i o 12
A 1000
A S te ooo 1000 806,45
D f A 1000 806,45 193.55
A S ti
f A ite't
i ta Il
t.ifa.tl
Equivalent interest rates simpleinterest
, Basic model II M CTI
EFI pca
maturity 1 What if I was paid DURINGTHE LIFETIME
V
interestrate if we want to
em pay I m times in a year
t I i I 1 i i i
t I iz Ii f l e2
th i iz 2ft Iria
II M It i if M M2 M is better
I Me iztttiz.it Zia I if Michi Ince is better
if h Mr font if i 2iz or iz
SO
ion and i are saidto be equivalent interest rates
in simple accumulation if f
i t im.lu t Vts.co
HI i O 15 e2 0 075 f2
I M Cfl to 15 2 41,30
I M Cfl to 075.2 2 Ch 30
Floating interest rates
Basicmodel e is constant A clitit I M C i t.ee
What if e changes throughout t
O f T
in tie I l l s I c t.in tlc.IT H in
ie ie M Ct k t.im tk IT tl.ie
II ka C fit in t f t
M CLI t ists
bB
fl H and
4ft are fin factors It 201
fat is accumulation factor UH I ftzo
WH is discountfactor fat
it at if it o.it
fat a o l
flt
Accumulation financialLAW
fl
If depends only on
St o rt
4ft e if s o.ie yfH e
Discountfinancial LAW
14dependsonlyon t1
Basic formulato get M M C
fat
3asic formula to get A A S 4ft
waysto
There are different calculate had
A Simple interest
Simple Accumulation In
Simplefrational discount A
Compoundaccumulation M
B Compound interest
Co.ampound discount A
Advanced simple accumulation m
C Advanced Simple interest
Bartylinear discount A
Simple Interest
Simple accumulation
o t
l l s M C get and I M C
C M
r I I 4
,ASSOMPTION
I is a function of Cfprincipal tfLifetime and i parameter definedby
I C t i i o
Since M CTI and I C t i Mi Ct C t e
M Ch te't
FRI
SIMPLEACCUMULATION
FACTOR
of
Properties
fft
It it is affine function of t
fft a
f f is increasing and
f is as 1 a
i ri
and
fftt ltifrltizt.pt
fettzo fb I
o t
o t
I
KI I 7 C 1000
C M i o 07
if f 2 M eooo f l t 0.0702 tooo 1.14 1140 E
Ie M C 1140 1000 140 E
M C fit it
C Me or C Mfititt
it it
i TIE Y
t.it E 1
SimpleNational Discount
, o t
l l s A C YIH D S A
A S
ASSUMPTION
fft 441 1 httso
I te't t i
ASSUMPTION
fat so o
fl 414 1
target find yet yftl.it t Simplediscount factor
fetleitit
A S
fat
Properties of 441
It t so and 4101 1
His decreasing w.r.tt
Y so as 1 to
ft
i 44 1 presentvalue of E1 available on
O f t
O 2
KI l l s f tooo f 2 i o 12
A 1000
A S te ooo 1000 806,45
D f A 1000 806,45 193.55
A S ti
f A ite't
i ta Il
t.ifa.tl
Equivalent interest rates simpleinterest
, Basic model II M CTI
EFI pca
maturity 1 What if I was paid DURINGTHE LIFETIME
V
interestrate if we want to
em pay I m times in a year
t I i I 1 i i i
t I iz Ii f l e2
th i iz 2ft Iria
II M It i if M M2 M is better
I Me iztttiz.it Zia I if Michi Ince is better
if h Mr font if i 2iz or iz
SO
ion and i are saidto be equivalent interest rates
in simple accumulation if f
i t im.lu t Vts.co
HI i O 15 e2 0 075 f2
I M Cfl to 15 2 41,30
I M Cfl to 075.2 2 Ch 30
Floating interest rates
Basicmodel e is constant A clitit I M C i t.ee
What if e changes throughout t
O f T
in tie I l l s I c t.in tlc.IT H in
ie ie M Ct k t.im tk IT tl.ie
II ka C fit in t f t
M CLI t ists
