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pricipal=A(1+R/100)
rate=p(1+a/100)
time =p(1+a/100)
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- Principle
- Principal =Future Amount(1+Rate per Period)Number of Periods=Future Amount(1+Rate per Period)Number of Periods
- Rate
- Determining the nominal rate of interest;
- Nominal Rate of Interest = Rate per Period x Periods per Year
- Time
- Here are the steps in order to get the total number of periods:
- 1) Future amount, principal, nominal rate of interest and number of periods per year should be given.
- 2) Divide the future amount by the principal amount.
3) Transform the equation into. logarithmic form.
Future AmountPrincipal=(1+Nominal RatePeriods per Year)Number of Periods−−−(II)Future AmountPrincipal=(1+Nominal RatePeriods per Year)Number of Periods---(II)
Taking log on both sides,
log (Future AmountPrincipal)=(Number of Periods)(Future AmountPrincipal)=(Number of Periods) x log (1+Nominal RatePeriods per Year)(1+Nominal RatePeriods per Year)
Number of Periods=log(Future AmountPrincipal Amount)log(1+Nominal RatePeriods per Year)
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