Compounding factor - Revision history

imported>Doug Williamson: Add second example.

2022-03-07T11:06:43Z

Add second example.

← Older revision		Revision as of 11:06, 7 March 2022
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	<span style="color:#4B0082">'''Example'''</span>		<span style="color:#4B0082">'''Example 1 - compounding factor calculation'''</span>

	Annual effective yield (r) = 6%.		Annual effective yield (r) = 6%.
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	= 1.06<sup>2</sup>		= 1.06<sup>2</sup>

	= 1.1236.		= '''1.1236.'''


			<span style="color:#4B0082">'''Example 2 - future value calculation'''</span>

			Continuing Example 1, where the compounding factor for a two-year period = 1.1236.

			If the starting amount (present value) is, for example, $100m,

			the end amount (future value) is given by:

			FV = PV x CF

			= $100m x 1.1236

			= '''$112.36m.'''

2019-06-26T14:28:13Z

Layout.

← Older revision		Revision as of 14:28, 26 June 2019
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			''Financial maths.''

	(CF).		(CF).

	A number greater than one ~~which~~ we multiply a present value by, to work out its [[Future Value]] (FV) as:		A compounding factor is a number greater than one, that we multiply a present value by, to work out its [[Future Value]] (FV) as:

	FV = CF x present value.		FV = CF x present value.

2018-02-22T11:48:30Z

Categorise.

← Older revision		Revision as of 11:48, 22 February 2018
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	* [[Future value]]		* [[Future value]]
	* [[Present value]]		* [[Present value]]

			[[Category:Financial_management]]
			[[Category:Corporate_finance]]
			[[Category:Manage_risks]]

2016-01-15T19:20:14Z

Improve calculation.

← Older revision		Revision as of 19:20, 15 January 2016
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	The Compounding Factor is calculated from the periodic yield as:		The Compounding Factor is calculated from the periodic yield as:

	CF = ( 1 + periodic yield )<sup>n</sup>		CF = (1 + periodic yield)<sup>n</sup>

	Where:		Where:
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	Then:		Then:

	Compounding Factor = ( 1 + r )<sup>n</sup>		Compounding Factor = (1 + r)<sup>n</sup>

	= 1.06<sup>2</sup>		= 1.06<sup>2</sup>

2015-11-13T15:07:52Z

Colour change of example headers

← Older revision		Revision as of 15:07, 13 November 2015
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	'''Example'''		<span style="color:#4B0082">'''Example'''</span>

	Annual effective yield (r) = 6%.		Annual effective yield (r) = 6%.

2015-04-14T05:15:17Z

Generalise to any maturity.

← Older revision		Revision as of 05:15, 14 April 2015
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	The ~~periodic~~ Compounding Factor is calculated from the periodic yield as:		The Compounding Factor is calculated from the periodic yield as:

	CF = ( 1 + periodic yield )<sup>n</sup>		CF = ( 1 + periodic yield )<sup>n</sup>

2015-04-14T05:04:19Z

Generalise to any number of periods.

← Older revision		Revision as of 05:04, 14 April 2015
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	The periodic Compounding Factor is calculated from the periodic yield as:		The periodic Compounding Factor is calculated from the periodic yield as:

	CF = ( 1 + periodic yield ).		CF = ( 1 + periodic yield )<sup>n</sup>

			Where:

			n = number of periods

2015-03-21T11:52:32Z

Standardise appearance of page

← Older revision		Revision as of 11:52, 21 March 2015
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	~~For example when the annual effective yield (r) = 6%~~		'''Example'''

	~~and the number~~ of years in the total period (n) = 2~~, then~~:		Annual effective yield (r) = 6%.

			Number of years in the total period (n) = 2.

			Then:

	Compounding Factor = ( 1 + r )<sup>n</sup>		Compounding Factor = ( 1 + r )<sup>n</sup>
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	= 1.06<sup>2</sup>		= 1.06<sup>2</sup>

	= 1.1236		= 1.1236.

2015-03-14T15:26:59Z

← Older revision		Revision as of 15:26, 14 March 2015
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	and the number of years in the total period (n) = 2, then:		and the number of years in the total period (n) = 2, then:

	Compounding Factor = (1+r)<sup>n</sup>		Compounding Factor = ( 1 + r )<sup>n</sup>

	= 1.06<sup>2</sup>		= 1.06<sup>2</sup>

2015-03-14T15:26:25Z

Align presentation of formula with qualification material

← Older revision		Revision as of 15:26, 14 March 2015
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	The periodic Compounding Factor is calculated from the periodic yield as:		The periodic Compounding Factor is calculated from the periodic yield as:

	CF = (1 + periodic yield).		CF = ( 1 + periodic yield ).