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Formulas in Business Math

This document provides formulas for various calculations involving interest and discounts, including: 1) Simple interest and simple discount formulas involving principal (P), interest rate (r), time (t), amount (F), and discount (D). 2) Compound interest formulas involving principal (P), interest rate (i), number of compounding periods (m), time (t), and amount (F). 3) Formulas for calculating time, nominal interest rate, effective rate, nominal rate, and continuous compounding involving the same variables.

Uploaded by

Geraldo Mejillano
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
614 views

Formulas in Business Math

This document provides formulas for various calculations involving interest and discounts, including: 1) Simple interest and simple discount formulas involving principal (P), interest rate (r), time (t), amount (F), and discount (D). 2) Compound interest formulas involving principal (P), interest rate (i), number of compounding periods (m), time (t), and amount (F). 3) Formulas for calculating time, nominal interest rate, effective rate, nominal rate, and continuous compounding involving the same variables.

Uploaded by

Geraldo Mejillano
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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DE LA SALLE LIPA ________________________________________________________________________

Formulas in Business Math

Simple Interest: Simple Discount:


I = Prt D = Fdt
𝐼 =𝐹−𝑃 𝐷 =𝐹−𝑃
F=P+I P=F–D
F = P(1 + rt) P = F(1 – dt)
𝐼 𝐷
𝑡= 𝑑=
𝑃𝑟 𝐹𝑡
𝐹−𝑃 𝐹−𝑃
𝑡= 𝑑=
𝑃𝑟 𝐹𝑡
𝐼 𝐷
𝑟= 𝑡=
𝑃𝑡 𝐹𝑑
𝐹−𝑃 𝐹−𝑃
𝑟= 𝑡=
𝑃𝑡 𝐹𝑑
𝐼 𝐷
𝑃= 𝐹=
𝑟𝑡 𝑑𝑡
𝐹 𝐹−𝑃
𝑃= 𝐹=
(1+𝑟𝑡) 𝑑𝑡
𝑃
𝑃 =𝐹−𝐼 𝐹=
(1 – 𝑑𝑡)
𝑑
𝑟=
1 – 𝑑𝑡
𝑟
𝑑=
1 + 𝑟𝑡

Compound Interest: Compound Amount at a Fraction of a Period:


𝑟
𝑖= Step 1: F1 = P(1 + i)n
𝑚
Step 2: F = F1(1 + rt)
n = t(m)
F = P(1+i)n Present Value at a Fraction of a Period:
𝐹
𝑃= or P = F(1 + i) –n Step 1: P1 = F(1 + i) –n
(1+𝑖)𝑛
Step 2: P = P1(1 + rt)

Time in Compound Interest: Nominal Rate of Compound Interest:


𝐹 1
𝑙𝑜𝑔(𝑃) 𝐹 𝑛
𝑛= 𝑖= (𝑃) −1
log(1+𝑖)
𝑟
and since n = tm, and since 𝑖 = ,
𝑚
𝑛
therefore, 𝑡 = therefore, r = i(m)
𝑚

Effective Rate: Nominal Rate:


𝑟 𝑚 1
𝑢 = (1 + ) − 1 𝑟 = 𝑚 [(1 + 𝑢)𝑚 − 1]
𝑚

Continuous Compounding:
𝐹 = 𝑃𝑒 𝑗𝑡
𝑃 = 𝐹𝑒 −𝑗𝑡

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