A SCHEMA FOR INVESTMENT FORMULAE.
The article presents information on interest formulae. Several subject areas in accounting require students to employ compound interest calculations: investments, bond issuances and refundings, certain depreciation methods and more recently, the capital-budgeting problems. It would be the exceptional course where all these diverse issues were discussed; accordingly, it seems appropriate to arm the student with a schema easily leaned and almost unforgettable in lieu of several formulae cluttered with negative exponents and unmeaningful symbols. Such a device appears initially as shown in the diagram, in which the four quadrants represent one of the well known "Tables" or categories of problems. The vertical dividing line separates augmentative or "forward looking" problems (amount of) on the right from diminishing or "backward looking" (present value of) problems on the left. The horizontal dividing line separates single sums, on the top, from series of sums (annuities) on the bottom. All symbols are mnemonics, capital letters are employed only below the horizontal dividing line.
- DOI
- 10.2308/tar-7106816
- Volume
- 38 (4)
- Pages
- 833-834
- Language
- en
- Export
- BibTeX
- Sources
- openalex crossref