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Simple Interest
F=P+ I
I =Pin
F=P(1+)
Remember:
- Default interest is per year.
- Value of m if:
Semi - Annually - 2
Quarterly - 4
Monthly - 12
Daily - 360
Ordinary Simple Interest
- 1 year = 360 days
Exact Simple Interest
One year is:
- 365 days if ordinary year.
- 366 days if leap year.
It is leap year if:
- Divisible by 4
- If it is century year, it must be
divisible by 400.
Compound Interest
F=P(1+i)n
F=P(1+
r mt
)
m
F=P ern
Effective Rate
ER=(1+ i)n1
ER=er 1
Annuity
[
[
(1+i)n 1
F=A
i
P= A
1(1+i)
i
DeferredAnnuity
P= A
1(1+i)
i
(1+i)k
Perpetuity
P=
A
i
VARIABLES
F = Future Amount
P = Present Amount
I = Interest
i = Interest Rate
n = Number of Years
m = No. of Compounding Years
t = Number of Years
ER = Effective Rate
A = Annuity
k =Number of Years Before
Depreciation
Straight Line Method
- Simplest Method
d=
C oC n
n
C
( ndismantle)
C o
n
d=
D m=d (m)
d
x 100
Co
C oC n
(1+i ) 1
i
D m=d
k=
2
n
m1
2
n
( )
d m=C o 1
2
n
2
Cm =C o (1 )
n
Cm =C oDm
k=
Dm=C oCm
(1+i ) 1
i
Dm=C oCm
Years=
2
n C
=1 n
n
Co
Cm =C oDm
d m=C o Cn
ReverseYear
Years
Dm=d 1+ d2
D m=
Declining Balance
Method/Matheson Formula
- Fixed percentage
n(n+1)
2
(RY 1 + RY 2 )
(C oC n )
Years
Cm =C oDm
Service-Output Method
Cm =C o (1k )
k =1
k =1
Cm
Co
Cn
Co
Co Cn
H year
Ht
b. Output Method
d n=
Co Cn
Q year
Qt
VARIABLES
Co = First Cost
Cn = Cost After n Years / Trade-in Value
n = Life of the Property
Dm = Total Depreciation After m Years
i = Interest Rate
k = Rate of Depreciation
Ht = Total No. of Hours
Hyear = No. of Hours for a Certain Year
Qt = Total No. of Output
Qyear = No. of Output for a Certain Year
Bonds
Decreasing
( 1+i )n1
i
1( 1+ g ) ( 1+i )
First Price
ig
I =Fr
A+I
Bond Value
1(1+i)
V n=Fr
i
+C(1+i )
I =Fr
A = Periodic Deposit to the Sinking Fund
Vn = Value of the Bond in n Periods Before
Redemption
F = Face Value
C = Redemption Price/Selling Price
r = Bond rate
I = Interest on the Bond per Period
F = Accumulated Amount, Amount
Needed to Retire the Bond
Gradient
P= A
F=A
[[
] [
]] [[
1( 1+i )n G 1( 1+i )n
n(1+i)n
i
i
i
] ]
n
(1+i)n1
G (1+i) 1
n
i
i
i
Economic Studies
Geometric Gradient
Increasing
P=First Price
1 (1+ g )n ( 1+i )n
ig
EUAC
Comparing Alternatives
Rate of Return on Additional
Investment
1( 1+ i )
i
Capitalized Cost
Co +
Cost of Renovation A
+
n
i
(1+i ) 1
Depreciation is Given
n
1(1+i)
Co + d
i