Percent and rate
The percent equivalent of 1/4.
25%
The mathematical display for the starting value
V0
The number of periods for calculating interest on a savings account that is compounded monthly for two years.
24 periods
The name for the decrease in value of an asset for tax purposes.
depreciation
The type of account that a scholarship fund is funded from, where the balance remains the same, and the payment is the same as the interest earned
perpetuity
The decimal equivalent to 7.5%.
0.075
The recursion relation for the scenario: an investment of $500, with simple interest rate of 2.2%
Vo=500, Vn+1=Vn + 11
The value of an account that starts with $300 and is compounded monthly at 3.5% p.a. for one year.
300 x (1+ 3.5/100 x 12)^12
$310.67
The type of depreciation where value decreases depending on how much the asset has been used
Unit cost depreciation
If the interest made in one month was $141.25 and the previous balance was $12000, what is the interest rate per month?
141.25/12000 x 100 = 1.18%
The R value when there is flat rate depreciation of 8.5%
R = 0.915 (1.0-0.085)
the recursion relation for a car that was purchased for $18,000 and depreciates at a flat rate of $550 per year
Vo=18,000 Vn+1=Vn - 550
The number of periods when interest is compounded quarterly for five years.
20
Description for when an asset has been depreciated to the point where it is no longer considered valuable to the company for tax purposes.
scrap value
An investment that gains interest and then a payment is taken out each month, continuing until there is no money left.
Annuity
the monthly interest rate when the rate is 12.5% p.a compounding quarterly
12.5/4 = 3.125% per month
The R value for the recurrence relation where $4750 is borrowed at an annual rate of 3.75% p.a, compounding quarterly.
R = 1.009375
The interest charged on $567, compounded monthly, when the annual interest rate is 15%.
567 x (15/100 x 12)
$7.0875 = $7.09
A method of reducing the value of an asset where it is uniformly reduced each year until it is not worth anything.
Flat rate depreciation
Which is a better bank rate option for an investment account:
Option 1: 4.56% pa, compounding monthly
Option 2: 4.50% pa, compounding fortnightly
Option 1: r(eff)=4.66%
Option 2 r(eff) = 4.60%
So option 1 as its an investment
The effective interest rate when the bank advertises 4.75% p.a, compounding fortnightly
r(eff) = 4.86%
the annual interest rate in the following recurrence relation, where compounding occurs fortnightly:
Vo=10,000 Vn+1= 1.000875Vn -380
.000875 x 26 x 100
r=2.275%
The value of the following reducing balance loan after 3 months, when it compounds monthly:
Vo= 245,000 Vn+1=1.000245xVn - 980
$242663.71
An R value of 0.895 tells us the depreciation rate as a percentage is....
r=10.5%
Balance at the end of two months for a starting amount of $1590 with interest compounded monthly at 19% p.a. and monthly payments of $160.
$1318.22