Compounding factor and Scheme of arrangement: Difference between pages

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(CF).  
''Insolvency law.'' 
 
An agreeement between a financially distressed company and its creditors or members to effect a merger or a restructuring, which requires the sanction of the court.
A number greater than one which we multiply a present value by, to work out its [[Future Value]] (FV) as:
 
FV = CF x present value.
 
 
The Compounding Factor is calculated from the periodic yield as:
 
CF = (1 + periodic yield)<sup>n</sup>
 
Where:
 
n = number of periods
 
 
<span style="color:#4B0082">'''Example'''</span>
 
Annual effective yield (r) = 6%.
 
Number of years in the total period (n) = 2.  
 
Then:
 
Compounding Factor = (1 + r)<sup>n</sup>
 
= 1.06<sup>2</sup>
 
= 1.1236.
 


== See also ==
== See also ==
* [[Compounding effect]]
* [[Insolvency]]
* [[Discount factor]]
* [[Merger]]
* [[Future value]]
* [[Present value]]


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

Revision as of 14:20, 23 October 2012

Insolvency law. An agreeement between a financially distressed company and its creditors or members to effect a merger or a restructuring, which requires the sanction of the court.

See also