Thread: 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.

Originally Posted by 0123

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

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

?