CKO and Compounding factor: Difference between pages

Revision as of 05:04, 14 April 2015

(CF).

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 periodic Compounding Factor is calculated from the periodic yield as:

CF = ( 1 + periodic yield )ⁿ

Where:

n = number of periods

Example

Annual effective yield (r) = 6%.

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

Then:

Compounding Factor = ( 1 + r )ⁿ

= 1.06²

= 1.1236.

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-Chief Knowledge Officer.
+(CF).
+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 periodic Compounding Factor is calculated from the periodic yield as:
+CF = ( 1 + periodic yield )<sup>n</sup>
+Where:
+n = number of periods
+'''Example'''
+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 ==
-* [[CEO]]
+* [[Compounding effect]]
-* [[CFO]]
+* [[Discount factor]]
-* [[CIO]]
+* [[Future value]]
-* [[CISO]]
+* [[Present value]]
-* [[CSO]]