P m j t i n
2 14,800.00 2 6% 4 0.03 8.00
3 28,000.00 4 10% 1 0.025 4.00
4 20,000.00 4 5% 0.75 0.0125 3.00
Using Table Factor
Table Factor
1 32,350.00 1 6% 4 1.26248
2 18,000.00 1 1% 10 1.10462
3 12,300.00 2 3% 4 1.12649
4 12,500.00 4 8% 5 1.48595
Principal Rate Years Simple Interest Table Factor Compound Interest
1 5,400.00 6% 4 1296 1.26248 1,417.38
2 9,200.00 5% 6 2760 1.34010 3,128.88
3 1,200.00 8% 15 1440 3.17217 2,606.60
4 4,625.00 4% 10 1850 1.48024 2,221.13
Problem Solving
P m j t i n
1 2,800.00 4 6% 5 0.015 20.00
2 6,000.00 2 5% 4 0.025 8.00
3 42,000.00 4 6% 1 0.015 4.00
4.a 18,000.00 4 8% 3 0.02 12.00
4.b 18,000.00 4 8% 6 0.02 24.00
4.c Additional Interest:
F Interest
18,748.20 3,948.20
30,906.76 2,906.76
20,759.41 759.41
F Interest
40,841.13 8,491.13
19,883.20 1,883.20
13,855.86 1,555.86
18,574.34 6,074.34
nd Interest Difference
121.38
368.88
1,166.60
371.13
F Interest
3,771.19 971.19
7,310.42 1,310.42
44,577.27 2,577.27
22,828.35 4,828.35
28,951.87 10,951.87
al Interest: 6,123.52
F t j m i n Table Factor
1 12300 3 6% 1 0.06 3 0.83962
2 14500 2.5 8% 4 0.02 10 0.82035
3 9350 4 5% 2 11 8 0.00000
4 850 10 9% 2 0.045 20 0.41464
5 18853 11 6% 4 0.015 44 0.51939
Problem Solving
PV j m i n excess F1
1 50,000.00 16% 2 0.08 1 1 54,000.00
Loan Date: 8/15/2010
7 months
Maturity Date: 3/15/2011
PV j m i n excess F1
2 200,000.00 25% 4 0.0625 22 1 759,043.47
𝒋=𝒎(√(𝒎&𝑬+𝟏)−𝟏)
E m j
3 0.09 4 0.0871
4 j m E
0.0915 3 0.0943
5 j m E PV FV=PV*E
0.06 4 0.0614 80,000 84,909.08
6 Original Investment Company
j m E PV FV=PV*E
0.12 12 0.1268 100,000 112,682.50
Newl Investment Company
j m E PV FV=PV*E
0.12 4 0.1255 100,000 112,550.88
None. The effective rate of the original company is higher than the new investment company, therefore the old com
Effective rate is higher if there are more comppounding periods per year (m)
Present Value using Table Factor Present Value using Formula
10327.32 10327.32
11895.05 11895.05
0.00 0.00
352.45 352.45
9792.07 9792.07
Final Future Value
54,720.00
Final Future Value
774,856.87
FV=P(1+i)n
84,909.08
FV=P(1+i)n
112,682.50
FV=P(1+i)n
112,550.88
ment company, therefore the old company provides a better return
