NOTATION

FV = Future value (maturity value or accumulated i = Periodic rate of interest (interest rate per
value) of a loan or investment compounding period)

PV = Present value (discounted value or principal m = Number of compounding periods per year
amount) of a loan or investment (compounding frequency)

I = Amount of compound interest of a loan or
investment
j = Nominal (stated or quoted) annual interest rate
n = Number of compounding periods during the term
t = Time period or term in years
f = Effective interest rate (annually compounding rate)

FORMULAS

Future Value | 9.1(a) Nominal Interest Rate | 9.5(b)

𝐹𝑉 = 𝑃𝑉(1 + 𝑖)𝑛 𝑗 = 𝑚× 𝑖

Present Value | 9.1(b) Number of Compounding Periods | 9.6(a)

𝐹𝑉 𝐹𝑉
𝑃𝑉 = 𝒐𝒓 𝑃𝑉 = 𝐹𝑉(1 + 𝑖)−𝑛 𝑙𝑛 (𝑃𝑉 )
(1 + 𝑖)𝑛 𝑛 =
𝑙𝑛(1 + 𝑖)
Amount of Compound Interest | 9.1(c)
𝐼 = 𝐹𝑉 – 𝑃𝑉 Time Period in Years | 9.6(b)
𝑛
𝑡 =
Periodic Interest Rate | 9.1(d) 𝑚
𝑗
𝑖= Effective Interest Rate | 9.7
𝑚 𝑓 = (1 + 𝑖)𝑚 – 1
Number of Compounding Periods | 9.1(e)
Equivalent Periodic Interest Rate | 9.8(a)
𝑛 = 𝑚 × 𝑡
𝑖2 = (1 + 𝑖1 )𝑚1/𝑚2 – 1
Periodic Interest Rate | 9.5(a)
1 Equivalent Nominal Interest Rate | 9.8(b)
𝐹𝑉 𝑛 𝑗2 = 𝑚2 × 𝑖2
𝑖 =( ) – 1
𝑃𝑉