Summary

Summary Theory of Interest 152

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Course
Theory Of Interest 152 (TOI152)

Institution
Stellenbosch University (SUN)

Book
Calculating Interest with Financial Calculators

This document provides comprehensive notes for the Theory of Interest 152 module, covering key concepts, formulas, and notation from Chapter 1 to Chapter 2.5. It is structured as a detailed summary of the initial chapters, focusing on the foundational principles of financial mathematics, time value...

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Summarized whole book? No
Which chapters are summarized? Chapter 1 - chapter 2.5
Uploaded on September 25, 2024
Number of pages 8
Written in 2024/2025
Type Summary

notes

Book Title:Calculating Interest with Financial Calculators

Author(s):W. J. Conradie, A. Schoeman

Edition:2001
ISBN:9780797207356
Edition:Unknown

Institution
Stellenbosch University (SUN)
Course
Theory Of Interest 152 (TOI152)

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TOI:
1: Equations
K=Capital amount - PV
S=Accumulated amount - FV
i=Effective amount -
i^(m)=Nominal interest per year - I/YN
m=How many times per year will you earn interest -
n= How many years
N= How many interest periods (n x m) -N

+Rand amount (PV, P, FV) you are getting money in your pocket
: Getting a loan
: Withdrawing money from your account
-Rand amount (PV, P, FV) you are giving money from your pocket to somebody
else
: Making a loan payment
: Investing money in an an account

Simple interest:
- No interest on interest
- S = K + (K*i)n
- S = K + (1 + in)
- Not on financial calculator

If i is in ½ year then n must also be in ½ year ( or x2 the years)
n=i

, 2: Compound interest
Compound interest:
- Interest on interest

- Just know the notation
- Use time value of money functions
To find the present value

V notations = the value infront of v is the future value

Second functions payment: m; i^(m); P/YR
Nominal: year Effective: month
i^(12) = 0.10 py # - P/YR = 0.10/12
i^(4) = 0.10 py # - I/YR = 0.10/4
i^(3) = 0.10 py = 0.10/3
i^(2) = 0.10 py = 0.10/2
i^(1) = i = 0.10 py = 0.10/1

number between brackets is how many times a year interest is compounded

Interest during a specific period:
Int = End – Beginning

Beginning End

If there is a V it tells you that it is the future value.

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