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Math Help - interest rate

  1. #1
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    interest rate

    talking about accumulation factors in introduction to financial math, for compund interest accumulation factor, we have

    (1+ i) ^t = (1+i_m)^(T_m)

    where i_m means interest expressed in months
    and T_m time in month

    Then it says T_m= t x m

    why? I mean 1 month= 1 year/12 that is T_m= t / m

    I am getting confused. Thanks for all your help.
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  2. #2
    Grand Panjandrum
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    Quote Originally Posted by 0123 View Post
    talking about accumulation factors in introduction to financial math, for compund interest accumulation factor, we have

    (1+ i) ^t = (1+i_m)^(T_m)

    where i_m means interest expressed in months
    and T_m time in month

    Then it says T_m= t x m

    why? I mean 1 month= 1 year/12 that is T_m= t / m

    I am getting confused. Thanks for all your help.
    1 year = 12 months,

    so:

    t years = 12 t months

    RonL
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  3. #3
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    isn't the interest formula:

    A=P(1+r/n)^nt

    A=Interest Amount
    P=Money Deposited
    R=Interest Rate
    N=Number of times the money was compounded
    T=Time

    ?
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