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Finance math formula sheet, Cheat Sheet of Financial Accounting

North Dakota State University (NDSU)Financial Accounting

Financial formula sheet in simple interest, compound interest, effective rate, future value of ordinary annuities and sinking funds and annuities due.

Typology: Cheat Sheet

2021/2022

Uploaded on 02/07/2022

magicphil
magicphil 🇺🇸

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SummaryofFinancialMathFormulas:
SimpleInterest:
=InterestEarned
=Principal/PresentValue
=AnnualRate(decimal)
=Time(years)
󰇛1󰇜
CompoundInterest:
Ifyourloan/investmentiscompoundedmtimes
peryear:
󰇡1
󰇢=FutureValue/MaturityValue
=Principal/PresentValue
=AnnualRate(decimal)
=NumberofCompoundingPeriodsperYear
=Time(years)
Ifyourloan/investmentiscompounded
continuously:

EffectiveRate:
󰇡1
󰇢1Usethistocomputetheeffectiverateifyour
loan/investmentiscompoundedmtimesperyear.
1Usethistocomputetheeffectiverateifyour
loan/investmentiscompoundedcontinuously.
FutureValueofOrdinaryAnnuities&SinkingFunds:
󰇧󰇛1󰇜1
󰇨Thepayment/depositisattheENDoftheperiod.
=FutureValue/Totalamountaccrued
=Payment/Depositmadeineachperiod
=rateperperiod(usually
)
=totalnumberoftimescompounded(󰇜

󰇛1󰇜1
AnnuitiesDue:
󰇧󰇛1󰇜 1
󰇨Thepayment/depositisattheBEGINNINGofthe
period
PresentValueofOrdinaryAnnuities&Amortization:
󰇧1󰇛1󰇜
󰇨ThepaymentismadeattheENDoftheperiod.
P=PresentValue
=Paymentmadeineachperiod
=rateperperiod(usually
)
=totalnumberoftimescompounded(󰇜

1󰇛1󰇜

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Download Finance math formula sheet and more Cheat Sheet Financial Accounting in PDF only on Docsity!

Summary of Financial Math Formulas:

Simple Interest:

ݐݎ ܲൌ ܫ ܫ^ =^ Interest^ Earned

ܲ = Principal/Present Value ݎ = Annual Rate (decimal)

ܣ ܲൌ ሺ1 ൅ ݐݎሻ ݐ = Time (years)

Compound Interest:

If your loan/investment is compounded m times per year:

௠௧ ܣ = Future Value/Maturity Value ܲ = Principal/Present Value ݎ = Annual Rate (decimal) ݉ = Number of Compounding Periods per Year ݐ = Time (years)

If your loan/investment is compounded continuously:

Effective Rate:

௠

Use this to compute the effective rate if your loan/investment is compounded m times per year.

ݎ௘ ݁ൌ ௥^ െ 1

Use this to compute the effective rate if your loan/investment is compounded continuously.

Future Value of Ordinary Annuities & Sinking Funds:

ሺ1 ൅݅ ሻ ௡^ ݅1 െ

The payment/deposit is at the END of the period. ܵ = Future Value/Total amount accrued ܴ = Payment/Deposit made in each period ݅ = rate per period (usually ݅ ൌ (^) ௠௥ ) ݊ = total number of times compounded (݊ ሻݐ ݉ൌ

ሺ1 ൅݅ ሻ ௡^ െ 1

Annuities Due:

ሺ1 ൅݅ ሻ ௡ାଵ^ ݅1 െ

The payment/deposit is at the BEGINNING of the period

Present Value of Ordinary Annuities & Amortization:

The payment is made at the END of the period. P = Present Value ܴ = Payment made in each period ݅ = rate per period (usually ݅ ൌ (^) ௠௥ ) ݊ = total number of times compounded (݊ ሻݐ ݉ൌ

1 െ ሺ1 ൅݅ ሻି^ ௡^