SIMPLE INTEREST FORMULAS:
I = Prt simple interest
P=I principal
rt
r=I interest rate per period
Pt
t=I time
Pr
I= F- P or Interest
P = F- I or Present Value or P = F
1 + rt
F=P+I Future Value or F = P(1+rt)
ORINARY AND EXACT INTEREST:
Io = Pr(days ) Ordinary interest (Banker’s Rule)
360
Ie = Pr (days) Exact Interest
365
SIMPLE DISCOUNT FORMULAS:
D = Fdt Simple discounts (Interest/discounts)
D= F-P
F= P Maturity value
1-dt
P = F (1-dt) Proceeds
d= D rate of discounts
Ft
t=D Time period
fd
COMPOUND INTEREST:
Compound Interest Formula Conversion Period/Interest
Period
Present value of compound
amount Conversion period refers to how
often the interest is calculated
P = F (1+i) -n over the term of the loan or
investment.
P= F
(1 + i )ⁿ m = 12 (monthly)
m = 4 (quarterly)
Where: m = 2 (semi-annually)
P = present value or principal m = 1 (annually)
F = Future Value m = 6 (bi-monthly)
i = rate per period (periodic
rate)
i = j/m
n = number of conversion
period
n = m(t)
t = time
j = nominal rate
m = conversion period
Compound Interest Formula Conversion Period/Interest
Period
Future value or compound
amount Is the time between
successive conversions of
F = P (1+i) n interest into principal
m = 12 (monthly)
m = 4 (quarterly)
Where: m = 2 (semi-annually)
F = future value m = 1 (annually)
i = rate per period (periodic m = 6 (bi-monthly)
rate)
i = j/m
n = number of conversion
period
n = m(t)
t = time
j = nominal rate
m = conversion period
Nominal rate of interest
I = antilog^(logF) – (logP) - 1
n
Finding unknown time
n = (log F) – (log P) or n = log (F/P)
log (1 + i) log (1 + i)
t = _n_
m