SlideShare a Scribd company logo
Discrete Compounding and
payment
BY. YOSUF HASAN ALDRAZ
Contents
 Introduction
 Single payment
 Annual uniform payment
 Uniform Gradient payment
 Examples
Introduction
 Discrete compounding refers to the
method by which interest is calculated
and added to the principal at certain
set points in time ,For example,
interest may be compounded weekly,
monthly, or yearly .
Single payment
P = F(P/F, i%,
N)
Annual uniform payment
F = A(F/A, i%, N) A = F(A/F, i%, N)
Uniform Gradient payment
P = G (P/G, i%, N)
A = G (A/G, i%, N)
Example 1 :-
 You borrow $15,000 from your credit
union to purchase a used car. The
interest rate on your loan is 0.25% per
month∗ and you will make a total of 36
monthly payments. What is your
monthly payment?
solution
Example 2 :-
 When you take your first job, you decide
to start saving right away for your
retirement. You put $5,000 per year into
the company’s 401(k) plan, which
averages 8% interest per year. Five
years later, you move to another job and
start a new 401(k) plan. You never get
around to merging the funds in the two
plans. If the first plan continued to earn
interest at the rate of 8% per year for 35
years after you stopped making
contributions, how much is the account
worth?
solution
Thank you

More Related Content

Similar to Discrete Compounding and payment.pptx

Quantitative literacy thinking between the lines third edit
Quantitative literacy thinking between the lines third editQuantitative literacy thinking between the lines third edit
Quantitative literacy thinking between the lines third edit
POLY33
 
Nominal And Effective Interest Rates.pptx
Nominal And Effective Interest Rates.pptxNominal And Effective Interest Rates.pptx
Nominal And Effective Interest Rates.pptx
Athar739197
 
time value of money,Simple interest and compound interest
time value of money,Simple interest and compound interesttime value of money,Simple interest and compound interest
time value of money,Simple interest and compound interest
JunaidHabib8
 
Financial maths
Financial mathsFinancial maths
Financial maths
mscartersmaths
 
4 CHAPTER 4 Mathematics of Finance short slide.pptx
4 CHAPTER 4 Mathematics of Finance short slide.pptx4 CHAPTER 4 Mathematics of Finance short slide.pptx
4 CHAPTER 4 Mathematics of Finance short slide.pptx
Hailemariam
 
L3 - With Answers.pdf
L3 - With Answers.pdfL3 - With Answers.pdf
L3 - With Answers.pdf
newton47
 
MODULE 4 CME.pptx
MODULE 4 CME.pptxMODULE 4 CME.pptx
MODULE 4 CME.pptx
surekha1287
 
Getting Your Financial House In Order
Getting Your Financial House In OrderGetting Your Financial House In Order
Getting Your Financial House In Order
Jerry Guttman
 
Time value of money ppt @ bec doms
Time value of money ppt @ bec domsTime value of money ppt @ bec doms
Time value of money ppt @ bec doms
Babasab Patil
 
Chapter 4 nominal & effective interest rates
Chapter 4   nominal & effective interest ratesChapter 4   nominal & effective interest rates
Chapter 4 nominal & effective interest rates
Bich Lien Pham
 
Chapter 4 nominal & effective interest rates
Chapter 4   nominal & effective interest ratesChapter 4   nominal & effective interest rates
Chapter 4 nominal & effective interest rates
Bich Lien Pham
 
Chapter 16 Financial Planning
Chapter 16 Financial PlanningChapter 16 Financial Planning
Chapter 16 Financial Planning
Alamgir Alwani
 
Time value of money
Time value of moneyTime value of money
Time value of money
Tazeen Islam
 
Lecture 4 tvm
Lecture 4  tvmLecture 4  tvm
Lecture 4 tvm
sohag sikder
 
Corporate finance Question
Corporate finance QuestionCorporate finance Question
Corporate finance Question
md harun
 
TOPIC-5-Interest-Rate-and-Its-Role-in-Finance.pdf
TOPIC-5-Interest-Rate-and-Its-Role-in-Finance.pdfTOPIC-5-Interest-Rate-and-Its-Role-in-Finance.pdf
TOPIC-5-Interest-Rate-and-Its-Role-in-Finance.pdf
kaylamaepalmadelacru
 
S3.pdf
S3.pdfS3.pdf
Introduction to Interest
Introduction to Interest Introduction to Interest
Introduction to Interest
WajeehaAhmed4
 
Mathcad seven common financial computations
Mathcad  seven common financial computationsMathcad  seven common financial computations
Mathcad seven common financial computations
Julio Banks
 
Compound Interest
Compound InterestCompound Interest
Compound Interest
VAISHIKA
 

Similar to Discrete Compounding and payment.pptx (20)

Quantitative literacy thinking between the lines third edit
Quantitative literacy thinking between the lines third editQuantitative literacy thinking between the lines third edit
Quantitative literacy thinking between the lines third edit
 
Nominal And Effective Interest Rates.pptx
Nominal And Effective Interest Rates.pptxNominal And Effective Interest Rates.pptx
Nominal And Effective Interest Rates.pptx
 
time value of money,Simple interest and compound interest
time value of money,Simple interest and compound interesttime value of money,Simple interest and compound interest
time value of money,Simple interest and compound interest
 
Financial maths
Financial mathsFinancial maths
Financial maths
 
4 CHAPTER 4 Mathematics of Finance short slide.pptx
4 CHAPTER 4 Mathematics of Finance short slide.pptx4 CHAPTER 4 Mathematics of Finance short slide.pptx
4 CHAPTER 4 Mathematics of Finance short slide.pptx
 
L3 - With Answers.pdf
L3 - With Answers.pdfL3 - With Answers.pdf
L3 - With Answers.pdf
 
MODULE 4 CME.pptx
MODULE 4 CME.pptxMODULE 4 CME.pptx
MODULE 4 CME.pptx
 
Getting Your Financial House In Order
Getting Your Financial House In OrderGetting Your Financial House In Order
Getting Your Financial House In Order
 
Time value of money ppt @ bec doms
Time value of money ppt @ bec domsTime value of money ppt @ bec doms
Time value of money ppt @ bec doms
 
Chapter 4 nominal & effective interest rates
Chapter 4   nominal & effective interest ratesChapter 4   nominal & effective interest rates
Chapter 4 nominal & effective interest rates
 
Chapter 4 nominal & effective interest rates
Chapter 4   nominal & effective interest ratesChapter 4   nominal & effective interest rates
Chapter 4 nominal & effective interest rates
 
Chapter 16 Financial Planning
Chapter 16 Financial PlanningChapter 16 Financial Planning
Chapter 16 Financial Planning
 
Time value of money
Time value of moneyTime value of money
Time value of money
 
Lecture 4 tvm
Lecture 4  tvmLecture 4  tvm
Lecture 4 tvm
 
Corporate finance Question
Corporate finance QuestionCorporate finance Question
Corporate finance Question
 
TOPIC-5-Interest-Rate-and-Its-Role-in-Finance.pdf
TOPIC-5-Interest-Rate-and-Its-Role-in-Finance.pdfTOPIC-5-Interest-Rate-and-Its-Role-in-Finance.pdf
TOPIC-5-Interest-Rate-and-Its-Role-in-Finance.pdf
 
S3.pdf
S3.pdfS3.pdf
S3.pdf
 
Introduction to Interest
Introduction to Interest Introduction to Interest
Introduction to Interest
 
Mathcad seven common financial computations
Mathcad  seven common financial computationsMathcad  seven common financial computations
Mathcad seven common financial computations
 
Compound Interest
Compound InterestCompound Interest
Compound Interest
 

Recently uploaded

STATATHON: Unleashing the Power of Statistics in a 48-Hour Knowledge Extravag...
STATATHON: Unleashing the Power of Statistics in a 48-Hour Knowledge Extravag...STATATHON: Unleashing the Power of Statistics in a 48-Hour Knowledge Extravag...
STATATHON: Unleashing the Power of Statistics in a 48-Hour Knowledge Extravag...
sameer shah
 
Population Growth in Bataan: The effects of population growth around rural pl...
Population Growth in Bataan: The effects of population growth around rural pl...Population Growth in Bataan: The effects of population growth around rural pl...
Population Growth in Bataan: The effects of population growth around rural pl...
Bill641377
 
Monthly Management report for the Month of May 2024
Monthly Management report for the Month of May 2024Monthly Management report for the Month of May 2024
Monthly Management report for the Month of May 2024
facilitymanager11
 
一比一原版(harvard毕业证书)哈佛大学毕业证如何办理
一比一原版(harvard毕业证书)哈佛大学毕业证如何办理一比一原版(harvard毕业证书)哈佛大学毕业证如何办理
一比一原版(harvard毕业证书)哈佛大学毕业证如何办理
taqyea
 
一比一原版(UCSB文凭证书)圣芭芭拉分校毕业证如何办理
一比一原版(UCSB文凭证书)圣芭芭拉分校毕业证如何办理一比一原版(UCSB文凭证书)圣芭芭拉分校毕业证如何办理
一比一原版(UCSB文凭证书)圣芭芭拉分校毕业证如何办理
nuttdpt
 
Challenges of Nation Building-1.pptx with more important
Challenges of Nation Building-1.pptx with more importantChallenges of Nation Building-1.pptx with more important
Challenges of Nation Building-1.pptx with more important
Sm321
 
原版一比一多伦多大学毕业证(UofT毕业证书)如何办理
原版一比一多伦多大学毕业证(UofT毕业证书)如何办理原版一比一多伦多大学毕业证(UofT毕业证书)如何办理
原版一比一多伦多大学毕业证(UofT毕业证书)如何办理
mkkikqvo
 
The Ipsos - AI - Monitor 2024 Report.pdf
The  Ipsos - AI - Monitor 2024 Report.pdfThe  Ipsos - AI - Monitor 2024 Report.pdf
The Ipsos - AI - Monitor 2024 Report.pdf
Social Samosa
 
DATA COMMS-NETWORKS YR2 lecture 08 NAT & CLOUD.docx
DATA COMMS-NETWORKS YR2 lecture 08 NAT & CLOUD.docxDATA COMMS-NETWORKS YR2 lecture 08 NAT & CLOUD.docx
DATA COMMS-NETWORKS YR2 lecture 08 NAT & CLOUD.docx
SaffaIbrahim1
 
Orchestrating the Future: Navigating Today's Data Workflow Challenges with Ai...
Orchestrating the Future: Navigating Today's Data Workflow Challenges with Ai...Orchestrating the Future: Navigating Today's Data Workflow Challenges with Ai...
Orchestrating the Future: Navigating Today's Data Workflow Challenges with Ai...
Kaxil Naik
 
办(uts毕业证书)悉尼科技大学毕业证学历证书原版一模一样
办(uts毕业证书)悉尼科技大学毕业证学历证书原版一模一样办(uts毕业证书)悉尼科技大学毕业证学历证书原版一模一样
办(uts毕业证书)悉尼科技大学毕业证学历证书原版一模一样
apvysm8
 
ViewShift: Hassle-free Dynamic Policy Enforcement for Every Data Lake
ViewShift: Hassle-free Dynamic Policy Enforcement for Every Data LakeViewShift: Hassle-free Dynamic Policy Enforcement for Every Data Lake
ViewShift: Hassle-free Dynamic Policy Enforcement for Every Data Lake
Walaa Eldin Moustafa
 
一比一原版(UO毕业证)渥太华大学毕业证如何办理
一比一原版(UO毕业证)渥太华大学毕业证如何办理一比一原版(UO毕业证)渥太华大学毕业证如何办理
一比一原版(UO毕业证)渥太华大学毕业证如何办理
aqzctr7x
 
一比一原版(UMN文凭证书)明尼苏达大学毕业证如何办理
一比一原版(UMN文凭证书)明尼苏达大学毕业证如何办理一比一原版(UMN文凭证书)明尼苏达大学毕业证如何办理
一比一原版(UMN文凭证书)明尼苏达大学毕业证如何办理
nyfuhyz
 
原版一比一弗林德斯大学毕业证(Flinders毕业证书)如何办理
原版一比一弗林德斯大学毕业证(Flinders毕业证书)如何办理原版一比一弗林德斯大学毕业证(Flinders毕业证书)如何办理
原版一比一弗林德斯大学毕业证(Flinders毕业证书)如何办理
a9qfiubqu
 
一比一原版(GWU,GW文凭证书)乔治·华盛顿大学毕业证如何办理
一比一原版(GWU,GW文凭证书)乔治·华盛顿大学毕业证如何办理一比一原版(GWU,GW文凭证书)乔治·华盛顿大学毕业证如何办理
一比一原版(GWU,GW文凭证书)乔治·华盛顿大学毕业证如何办理
bopyb
 
一比一原版兰加拉学院毕业证(Langara毕业证书)学历如何办理
一比一原版兰加拉学院毕业证(Langara毕业证书)学历如何办理一比一原版兰加拉学院毕业证(Langara毕业证书)学历如何办理
一比一原版兰加拉学院毕业证(Langara毕业证书)学历如何办理
hyfjgavov
 
Palo Alto Cortex XDR presentation .......
Palo Alto Cortex XDR presentation .......Palo Alto Cortex XDR presentation .......
Palo Alto Cortex XDR presentation .......
Sachin Paul
 
Module 1 ppt BIG DATA ANALYTICS_NOTES FOR MCA
Module 1 ppt BIG DATA ANALYTICS_NOTES FOR MCAModule 1 ppt BIG DATA ANALYTICS_NOTES FOR MCA
Module 1 ppt BIG DATA ANALYTICS_NOTES FOR MCA
yuvarajkumar334
 
4th Modern Marketing Reckoner by MMA Global India & Group M: 60+ experts on W...
4th Modern Marketing Reckoner by MMA Global India & Group M: 60+ experts on W...4th Modern Marketing Reckoner by MMA Global India & Group M: 60+ experts on W...
4th Modern Marketing Reckoner by MMA Global India & Group M: 60+ experts on W...
Social Samosa
 

Recently uploaded (20)

STATATHON: Unleashing the Power of Statistics in a 48-Hour Knowledge Extravag...
STATATHON: Unleashing the Power of Statistics in a 48-Hour Knowledge Extravag...STATATHON: Unleashing the Power of Statistics in a 48-Hour Knowledge Extravag...
STATATHON: Unleashing the Power of Statistics in a 48-Hour Knowledge Extravag...
 
Population Growth in Bataan: The effects of population growth around rural pl...
Population Growth in Bataan: The effects of population growth around rural pl...Population Growth in Bataan: The effects of population growth around rural pl...
Population Growth in Bataan: The effects of population growth around rural pl...
 
Monthly Management report for the Month of May 2024
Monthly Management report for the Month of May 2024Monthly Management report for the Month of May 2024
Monthly Management report for the Month of May 2024
 
一比一原版(harvard毕业证书)哈佛大学毕业证如何办理
一比一原版(harvard毕业证书)哈佛大学毕业证如何办理一比一原版(harvard毕业证书)哈佛大学毕业证如何办理
一比一原版(harvard毕业证书)哈佛大学毕业证如何办理
 
一比一原版(UCSB文凭证书)圣芭芭拉分校毕业证如何办理
一比一原版(UCSB文凭证书)圣芭芭拉分校毕业证如何办理一比一原版(UCSB文凭证书)圣芭芭拉分校毕业证如何办理
一比一原版(UCSB文凭证书)圣芭芭拉分校毕业证如何办理
 
Challenges of Nation Building-1.pptx with more important
Challenges of Nation Building-1.pptx with more importantChallenges of Nation Building-1.pptx with more important
Challenges of Nation Building-1.pptx with more important
 
原版一比一多伦多大学毕业证(UofT毕业证书)如何办理
原版一比一多伦多大学毕业证(UofT毕业证书)如何办理原版一比一多伦多大学毕业证(UofT毕业证书)如何办理
原版一比一多伦多大学毕业证(UofT毕业证书)如何办理
 
The Ipsos - AI - Monitor 2024 Report.pdf
The  Ipsos - AI - Monitor 2024 Report.pdfThe  Ipsos - AI - Monitor 2024 Report.pdf
The Ipsos - AI - Monitor 2024 Report.pdf
 
DATA COMMS-NETWORKS YR2 lecture 08 NAT & CLOUD.docx
DATA COMMS-NETWORKS YR2 lecture 08 NAT & CLOUD.docxDATA COMMS-NETWORKS YR2 lecture 08 NAT & CLOUD.docx
DATA COMMS-NETWORKS YR2 lecture 08 NAT & CLOUD.docx
 
Orchestrating the Future: Navigating Today's Data Workflow Challenges with Ai...
Orchestrating the Future: Navigating Today's Data Workflow Challenges with Ai...Orchestrating the Future: Navigating Today's Data Workflow Challenges with Ai...
Orchestrating the Future: Navigating Today's Data Workflow Challenges with Ai...
 
办(uts毕业证书)悉尼科技大学毕业证学历证书原版一模一样
办(uts毕业证书)悉尼科技大学毕业证学历证书原版一模一样办(uts毕业证书)悉尼科技大学毕业证学历证书原版一模一样
办(uts毕业证书)悉尼科技大学毕业证学历证书原版一模一样
 
ViewShift: Hassle-free Dynamic Policy Enforcement for Every Data Lake
ViewShift: Hassle-free Dynamic Policy Enforcement for Every Data LakeViewShift: Hassle-free Dynamic Policy Enforcement for Every Data Lake
ViewShift: Hassle-free Dynamic Policy Enforcement for Every Data Lake
 
一比一原版(UO毕业证)渥太华大学毕业证如何办理
一比一原版(UO毕业证)渥太华大学毕业证如何办理一比一原版(UO毕业证)渥太华大学毕业证如何办理
一比一原版(UO毕业证)渥太华大学毕业证如何办理
 
一比一原版(UMN文凭证书)明尼苏达大学毕业证如何办理
一比一原版(UMN文凭证书)明尼苏达大学毕业证如何办理一比一原版(UMN文凭证书)明尼苏达大学毕业证如何办理
一比一原版(UMN文凭证书)明尼苏达大学毕业证如何办理
 
原版一比一弗林德斯大学毕业证(Flinders毕业证书)如何办理
原版一比一弗林德斯大学毕业证(Flinders毕业证书)如何办理原版一比一弗林德斯大学毕业证(Flinders毕业证书)如何办理
原版一比一弗林德斯大学毕业证(Flinders毕业证书)如何办理
 
一比一原版(GWU,GW文凭证书)乔治·华盛顿大学毕业证如何办理
一比一原版(GWU,GW文凭证书)乔治·华盛顿大学毕业证如何办理一比一原版(GWU,GW文凭证书)乔治·华盛顿大学毕业证如何办理
一比一原版(GWU,GW文凭证书)乔治·华盛顿大学毕业证如何办理
 
一比一原版兰加拉学院毕业证(Langara毕业证书)学历如何办理
一比一原版兰加拉学院毕业证(Langara毕业证书)学历如何办理一比一原版兰加拉学院毕业证(Langara毕业证书)学历如何办理
一比一原版兰加拉学院毕业证(Langara毕业证书)学历如何办理
 
Palo Alto Cortex XDR presentation .......
Palo Alto Cortex XDR presentation .......Palo Alto Cortex XDR presentation .......
Palo Alto Cortex XDR presentation .......
 
Module 1 ppt BIG DATA ANALYTICS_NOTES FOR MCA
Module 1 ppt BIG DATA ANALYTICS_NOTES FOR MCAModule 1 ppt BIG DATA ANALYTICS_NOTES FOR MCA
Module 1 ppt BIG DATA ANALYTICS_NOTES FOR MCA
 
4th Modern Marketing Reckoner by MMA Global India & Group M: 60+ experts on W...
4th Modern Marketing Reckoner by MMA Global India & Group M: 60+ experts on W...4th Modern Marketing Reckoner by MMA Global India & Group M: 60+ experts on W...
4th Modern Marketing Reckoner by MMA Global India & Group M: 60+ experts on W...
 

Discrete Compounding and payment.pptx

  • 2. Contents  Introduction  Single payment  Annual uniform payment  Uniform Gradient payment  Examples
  • 3. Introduction  Discrete compounding refers to the method by which interest is calculated and added to the principal at certain set points in time ,For example, interest may be compounded weekly, monthly, or yearly .
  • 4. Single payment P = F(P/F, i%, N)
  • 5. Annual uniform payment F = A(F/A, i%, N) A = F(A/F, i%, N)
  • 6. Uniform Gradient payment P = G (P/G, i%, N) A = G (A/G, i%, N)
  • 7. Example 1 :-  You borrow $15,000 from your credit union to purchase a used car. The interest rate on your loan is 0.25% per month∗ and you will make a total of 36 monthly payments. What is your monthly payment?
  • 9. Example 2 :-  When you take your first job, you decide to start saving right away for your retirement. You put $5,000 per year into the company’s 401(k) plan, which averages 8% interest per year. Five years later, you move to another job and start a new 401(k) plan. You never get around to merging the funds in the two plans. If the first plan continued to earn interest at the rate of 8% per year for 35 years after you stopped making contributions, how much is the account worth?