NOTATION

FV = Future value (maturity value or

accumulated value) of a loan or investment

m = Number of compounding periods per year

(compounding frequency)

PV = Present value (discounted value or principal

amount) of a loan or investment

n = Number of compounding periods during the

term

I = Amount of compound interest of a loan or

investment

t = Time period or term in years

j = Nominal (stated or quoted) annual interest rate

f = Effective interest rate (annually compounding

rate)

i = Periodic rate of interest (interest rate per

compounding period)
FORMULAS
Future Value | 9.1(a)

FV =PV (1+ i)n

Present Value | 9.1(b)

PV =

FV
PV =FV (1+i)n
n
(1+i)

Nominal Interest Rate | 9.5(b)

j=mi

Number of Compounding Periods | 9.6(a)

ln
n=

Amount of Compound Interest | 9.1(c)

( FV
PV )

ln (1+i)

I =FV PV

Time Period in Years | 9.6(b)

Periodic Interest Rate | 9.1(d)

i=

j
m

t=

n
m

Effective Interest Rate | 9.7

Number of Compounding Periods | 9.1(e)

f =(1+i)m 1

n=mt

Equivalent Periodic Interest Rate | 9.8(a)

Periodic Interest Rate | 9.5(a)

FV
PV

1
n

( ) 1

i=

i 2=(1+i 1)m 1 /m 2 1

j 2=m2 i 2

Equivalent Nominal Interest Rate | 9.8(b)