Module 2 Lesson 1: Interest, Maturity, Future, and
Present Values in Simple Interest
In computing the simple interest and other related
components, the formula is
Is=Prt
The formula for finding the principal amount
P=Is/rt
The formula for finding the rate
R=Is/Pt
The formula for finding the time
T=Is/Pr
To find the maturity (future) value, you can use either of
the following:
or
F=P(1+rt) F=P+Is
Lesson 2: Interest, Maturity, Future, and
Present Values in Compound Interest
To find the compound interest, which is compounded
annually the formula to find the maturity value is:
F=P(1+r)t
To find the compound interest use the formula:
Ic=F-P
To find the present value or principal of the maturity
value F due in t years the formulas are:
t
P=F/(1+r)
Since the rate for each conversion period is represented
by j, then in t years, interest is compounded mt times.
Thus, the formula of Maturity Value for interest
compounding m times a year is:
n
F=P(1+j)
Meanwhile, the formula in finding the present value given
the maturity value is:
P=F/(1+j)n
Module 3 Lesson 2: Solving Problems
Involving Simple Interest
There is also different formula in getting the
different components of the compound interest
and they are the following:
F=P(1+r)
F=P(1+j)mt;maturity value for compounding more than once
a year
Ic=F-P ; Compound Interest
P=F/(1+j)mt ; present value
j=i(m)/m
Module 4 Lesson 1: Simple and General
Annuities
In computing the annuity and other related
components, the formula is:
Module 5 Lesson 1: Future
n and Present
A=P(1+i)
Values of Simple Annuity
The future value of an annuity is the total
accumulation of the payments and interest earned.
The present value of an annuity is the principal
that must be invested today to provide the regular
payment of an annuity.
Present Value Future Value
Simple
Annuit
[
P=R 1-(1+i)-n/i ] [
F=R (1+i)n -1/i ]
y Where Where
P-Present Value F-Future Value or
R-periodic payment Amount
R -interest rate per R-periodic payment
period; R -interest rate per
where i=r/m period;
i-annual rate where i=r/m
m-number of i-annual rate
conversion period in a m-number of
year conversion period in a
n-total number Of year
conversion periods n-total number Of
n =t(m) conversion periods
t-number of years n =t(m)
t-number of years
Lesson 2: Future and Present Values of
General Annuity
The future value of an annuity is the total
accumulation of the payments and interest earned.
The present value of an annuity is the principal
that must be invested today to provide the regular
payment of an annuity.
Present Value Future Value
Gener
al
P=R[1-(1+i)-n/(1+i)b-1 ] [
F=R (1+i)n -1/(1+i)b-1]
Annui Where Where
R-Regular payment R-Regular payment
ty R -interest rate per period;
R -interest rate per period;
where i=r/m where i=r/m
i-annual rate i-annual rate
m-number of conversion m-number of conversion
period in a year period in a year
n-total number Of n-total number Of
conversion periods conversion periods
n =t(m) n =t(m)
t-number of years t-number of years
B=p/c B=p/c
where p is the number of where p is the number of
months in a payment months in a payment
interval and c is the interval and c is the number
number of months in a of months in a compounding
compounding period. period.
