Question

Mathematical concepts of compounding and discounting streams of income. Demonstrate how the follo...

Mathematical concepts of compounding and discounting streams of income. Demonstrate how the following formulae or factors are derived:

  1. Amount of $1, A = (1+i)^n where i is the interest rate pa and n is the compounding/ discounting period in years
  2. Amount of $1 pa = (A-1)/i
  3. Present value of $1, V = 1/(1+i)^n
  4. Present value of $1 pa = (1-V)/i

What would be the formulae if the periodic incomes are receivable and compounded monthly instead of yearly?

The above formulae are derived on the basis that periodic incomes are receivable in arrears. How would you modify the formulae if the periodic incomes are receivable in advance, which is commonly the case for rental income?

0 0
Add a comment Improve this question Transcribed image text
Answer #1

paxt - yen ( prin cin fl a)0 w.tfotny4-FVDI+ŞIİf..n.+) to,th ttis pvu pont;め よ겨.tey gur( Citt) K t ニ C12- 2- あー2- 3 h-3 C-3 (I-ti)CI) V. A で1ャ「) ponMd20 R 1 /2 12 pn 12. 12

Add a comment
Know the answer?
Add Answer to:
Mathematical concepts of compounding and discounting streams of income. Demonstrate how the follo...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions
  • Mathematical concepts of compounding and discounting streams of income. Demonstrate how the following formulae or factors...

    Mathematical concepts of compounding and discounting streams of income. Demonstrate how the following formulae or factors are derived: Amount of $1, A = (1+i)^n where i is the interest rate pa and n is the compounding/ discounting period in years Amount of $1 pa = (A-1)/i Present value of $1, V = 1/(1+i)^n Present value of $1 pa = (1-V)/i What would be the formulae if the periodic incomes are receivable and compounded monthly instead of yearly? The above formulae...

  • #1 #2 Show Me How Calculator Print tem The net income reported on the income tatement...

    #1 #2 Show Me How Calculator Print tem The net income reported on the income tatement for the current year was 147,000. Depreciation recorded on Watty accounts at the beginning and end of the year w as follow requipment for the year amounted to $24,400. Balances of the current and cu ) Accounts receivable Merchandisiner End of Yew Beginning of Year $57,640 $53.030 41-330 39,190 56.430 59.660 6,340 5.040 ) 54010 50.170 29.510 32.770 Accounts payable merchandise ore W yle...

  • Time Value of Money Spreadsheet Example 4 Module IV Name: Date: 6 7 8 Question 1 9 Question 2 10 Question 3 11 Question...

    Time Value of Money Spreadsheet Example 4 Module IV Name: Date: 6 7 8 Question 1 9 Question 2 10 Question 3 11 Question 4 12 Question 5 13 Question 6 14 Question 7 15 Question 8 16 Question 9 17 Question 10 18 19 20 Single Amount or Annuity 21 Periodic Interest Rate 22 Number of Periods 23 24 25 Present Value of Single Amount 26 27 Future Value of Single Amount 28 29 Future Value of An Annuity...

  • I need help on question 2. MODULE IV: TIME VALUE OF MONEY INTRODUCTION The time value...

    I need help on question 2. MODULE IV: TIME VALUE OF MONEY INTRODUCTION The time value of money analysis has many a lysis has many applications, ranging from setting hedules for paying off loans to decisions about whether to invest in a partie financial instrument. First, let's define the following notations: I = the interest rate per period Na the total number of payment periods in an annuity PMT = the annuity payment made each period PV = present value...

  • MERCHANDISING ACOUNTING Joe Blink opened Blink Corporation. It has link Corporation. It has issued 20,000 shares...

    MERCHANDISING ACOUNTING Joe Blink opened Blink Corporation. It has link Corporation. It has issued 20,000 shares of $4 par value common stock. It authorized 900,000 S od 900,000 share. The corporation is a merchandising business. Blink ventory system. Also Blink provides a 2-year warranty with one of its products which was first sold in October. Blink Corporation Trial Balance periodic inventory system September 30 Cr. Cash Dr. $ 54,000 14,000 Inventory Land 45,000 Plant Building 500,000 Accumulated Depreciation-plant Equipment 200,000...

  • I need answers for my reviewer. 1. The time period assumption assumes that an organization's activities...

    I need answers for my reviewer. 1. The time period assumption assumes that an organization's activities may be divided into specific reporting time periods including all of the following A Month B Quarters C. Calendar years. D. Days 2. The 12-month period that ends when a company's sales activities are at their lowest level is called the A Fiscal year. B Calendar year. C. Natural business year. D. Accounting period 3. Courtney Company purchased equipment on November 1, 2018 and...

  • MERCHANDISING ACOUNTING Joe B Joe Blink opened Blink Corporation. It has issued 20.000 shares of $4...

    MERCHANDISING ACOUNTING Joe B Joe Blink opened Blink Corporation. It has issued 20.000 shares of $4 par value common stock. Blink anplies the authorized 900,000 share. The corporation is a merchandising business. Blink appies" periodic inventory system. Also Blink provides a 2 vear warranty with one of its produce which was first sold in October. Blink Corporation Trial Balance September 30 Dr. Cash Inventory Land $ 54,000 14,000 45,000 500,000 Plant Building Accumulated Depreciation-plant 200,000 4,000 Equipment 12,000 Accumulated depreciation--equipment...

  • CASE 1-5 Financial Statement Ratio Computation Refer to Campbell Soup Company's financial Campbell Soup statements in...

    CASE 1-5 Financial Statement Ratio Computation Refer to Campbell Soup Company's financial Campbell Soup statements in Appendix A. Required: Compute the following ratios for Year 11. Liquidity ratios: Asset utilization ratios:* a. Current ratio n. Cash turnover b. Acid-test ratio 0. Accounts receivable turnover c. Days to sell inventory p. Inventory turnover d. Collection period 4. Working capital turnover Capital structure and solvency ratios: 1. Fixed assets turnover e. Total debt to total equity s. Total assets turnover f. Long-term...

  • What an Executive Summary Is An executive summary is a specific type of document that does...

    What an Executive Summary Is An executive summary is a specific type of document that does two things: it summarizes a research article, and it offers recommendations as to how information from the article can be used. Some long reports can contain an executive summary section, as indicated in the Pearson handbook. Write a 2 pahe Executive Summary In business contexts, an executive summary is always written for a specific purpose: to explain the information in the article to a...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT