QuestionsSummary Notes on Financial Mathematics
Sibusiso Dlamini asked 2 years ago
  • There are two types of interest rates:

    Simple interest

    Compound interest

    A=P(1+in)

    A=P(1+i)n

    Where:

  • Hire purchase loan repayments are calculated using the simple interest formula on the cash price, less the deposit. Monthly repayments are calculated by dividing the accumulated amount by the number of months for the repayment.
  • Population growth and inflation are calculated using the compound interest formula.
  • Foreign exchange rate is the price of one currency in terms of another.